Distribution of Income
Source: Council for Economic Education (EconEdLink) | Type: Lesson
Students engage in a simulation to explore how productivity influences the distribution of income and how government policy influences the redistribution of income. They calculate measures of central tendency for the entire class, their group's percentage of total classroom income, and graph the Lorenz curve as a representation of the income distribution using an online graphing tool. Students simulate government policies to explore the impact on income distribution and income inequality. Students measure income inequality by interpreting the shape of the Lorenz curve, calculating the Gini coefficient by estimating the area under the Lorenz curve, and comparing the measures of central tendency. Students learn about the Temporary Assistance to Needy Families (TANF) welfare program in the United States and apply what they have learned about the income distribution and income inequality to examine TANF’s effect.
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