Economist Alan B. Krueger (2012) writes that “the rise in inequality in the United States over the last three decades has reached the point that inequality in incomes is causing an unhealthy division in opportunities, and is a threat to our economic growth” (

Inequality happens everywhere around the world and in every country. If there are rich people, then there must be poor people. The difference between the poor and the rich causes inequality.  What is the difference between inequality and inequity? Inequality means unfair situation, in which some groups in society have more money than others. Inequity means lack of fairness or justice.

When I walked in the street last week, I saw that someone was lying on the street wearing dirty clothes. It was difficult to tell the original color of the clothes. He is probably homeless. Homeless people usually spend very little money every day because they do not have income. They cannot spend lots of money. This will be bad for the development of the economy. Consumption will decrease. The economy relies on consumption of goods and services. Goods and services can be seen as part of Gross Domestic Product (GDP). GDP impacts standard of living. Moreover, poor people usually spend a higher percentage of income than rich people. Let’s assume that poor people receive $1,000 dollars monthly income. They may spend all the money. If they get $1,200 a month, then they will spend $1,200. The sum does not cover the living expenses of the poor.

Monthly spending is different for rich people. If wealthy receive 1,000,000 dollars, then they spend $100,000. If they receive $4,000,000, then they will still spend $100,000. They already have all the things they need for living; when they get more money, there is no need to spend more.

Poor people are more likely to spend more when there is an increase in income. If the poor receive more money, then they can spend more. This will be better for the development of the economy.




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