AE12: Economic Development

Module no.: 8
Module Title: Income Inequality

Writer: Adrian Z. de Lumen, LPT, MM

Opening prayer:

Heavenly Father,

Thank you for the talents and gifts you have given me and for the opportunity
of education. As we begin this module, Lord, please open my eyes to new
learnings. I pray for wisdom as I engage to learn through this module for clear
mind as I read and view the materials I pray that the knowledge I may gain
here will transform my heart and mind to follow you more and be of service to
my fellowmen.

May you be glorified, Lord. We ask this in the name of Jesus Christ our Lord
through the intercession of Saint Dominic De Guzman, and Saint Thomas
Aquinas.
Amen.

Topic 8: Income Inequality

MODULE INTRODUCTION AND FOCUS QUESTIONS:

For the whole semester we have discussed about the concepts of
economic development and its factors. For this module we will now enter the
realities of economy involving income of people. Considering the income,
inequality of wealth is always present. The task of the government is to bridge

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

the gap between these inequalities. Now the question is how to measure these
inequalities? How can we address these inequalities considering the government
policies? Let us find out as we continue learning here in economic development.

MODULE LESSONS AND COVERAGE:

This module has the following coverage:

Lesson Topics I should be able to Estimated time
…
Subtopic 1 Income To identify the poor, 3 hrs
inequality and what are their
economic
characteristics.
To identify the
nature of economic
growth, and who
benefits from it.
To identify the bad
effects of extreme
inequality.

Subtopic 2 Measuring To measure 3 hrs

inequality inequality and
poverty.
To identify the
policies required to
reduce the
magnitude and
extent of absolute
poverty.

Reminder: To do well in this module, you need to remember and do the

following:

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

1. Open the indicated website if there is any.

2. Take down notes and copy some important link so that you could go back
whenever you need information given in that site.
3. Review videos/articles as many times as needed
4. Make your google classroom account and enrol yourself to (section to follow).
Make sure to use your complete name as username.
5. All activities, exercises, and pre and post assessment must be answered and
compiled in 1 document (Please see separate document or answer sheet).
Your compilation must be submitted within a week after receipt of this module
in google classroom.
6. Pls. contact your instructor if there is any confusion thru this phone number
09198144813 or thru facebook messenger with this link
https://web.facebook.com/adrian.delumen.

PRE-ASSESSMENT:
Let’s find out how much you already know about this module.
True or False: Write T if the statement is true, F if the statement is false.
_____ 1. Income is classified as to amount regardless on how to earn it.
_____ 2. Income inequality is the gap among households with regards to their
earnings.
_____ 3. Income inequality is the disproportionate distribution of total national
income among households.
_____ 4. Income inequality is measurable.
_____ 5. The government needs to measure income inequality in order to
address the gap among its people.

This pre-assessment was just to make you more curious about the income
inequality. To correct our misconceptions in the topic let us explore below.

Study: Let us explore below.

Activity 1: Analyze the image below and answer the question that follows.

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

Process question:
1. Do you think there is a gap in this image? Why? Relate your answer in our
topic income inequality.

End of STUDY:
Your understanding of the topics will be increased as you study the lessons and
perform the activities in the RESEARCH phase.

Research: Let us firm up your understanding!

Your main goal in this section is to learn and understand some key concepts by
working on the following question:
 What is income inequality?
 What are the ways to measure income inequality?
 How can we bridge the gap of this kind of inequality?

Activity No. 2:

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

You have to watch the video first. After internalizing the video, try to answer the
process questions below.

For offline students: Please press control + click the image below for the linked
offline video. (If it does not work, open the video manually: “AE Video Module 8
Activity 2”

Please visit the link below

https://www.youtube.com/watch?v=0xMCWr0O3Hs&t=494s
(If the link does not work by clicking, copy and paste it to a web browser)

Process questions:
1. What is the difference of wealth and income inequality?
2. What level of inequality is acceptable? (You may just describe the society as
to what is acceptable inequality).
3. When does inequality start doing harm than good?

Important concepts:

Continue reading. . . . . . (control + click the link)

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

(If the link does not work, open the file manually: “Reading Material 8 - Income
inequality”)

Exercise 1: Supply what is being asked.

1. How many groups in quintiles?

a. 10 b. 4 c. 8 d. 5

2. How many groups in Deciles?

a. 10 b. 4 c. 8 d. 5

3. What does the 1st quintile represent?

a. commoner b. the poorest 20%
c. the poorest 40% d. the richest 20%

4. What does the 5th quintile represent?

a. commoner b. the poorest 20%
c. the poorest 40% d. the richest 20%

End of RESEARCH:
In this section, the discussion was about the income inequality in which we
learned the different ways to measure inequality. In developing our society it is
important to take into account the gap of people with regards to wealth. After
you have gone into this section, have you answered the question, “What is the
importance of knowing income inequality?”.

Now that you know the important ideas about this topic, let’s go deeper by
moving on to the next section.

Action: Apply your learnings!

Activity number 3: Performance task

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

In relation with your performance task in module 7, let income inequality be the
issue of the Philippines. Think of the possible causes of this problem together
with its possible solutions. Identify the concerned agency as well to address the
issue. Do this task by filling out the table below.

Note: Minimum of 3 causes and recommendations.

Issue Possible cause Recommendation Agency involve

of the issue (possible
solution)
Income inequality

CLOSURE:

SELF REFLECTION: Kindly put a check on your honest response given the
learning skill.
Learning With confidence Not sure though A little bit
outcomes confused
To identify the
poor, and what
are their
economic
characteristics.
To identify the
nature of
economic
growth, and who
benefits from it.
To identify the
bad effects of
extreme
inequality.
To measure

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

inequality and
poverty.
To identify the
policies required
to reduce the
magnitude and
extent of
absolute poverty.

Before you go to the post test, assess yourself using the self-reflection if you are
ready, if not you may reach me via messenger or sms for your queries.

Post-Assessment:
True or False: Write T if the statement is true, F if the statement is false.
_____ 1. Income is classified as to amount regardless on how to earn it.
_____ 2. Income inequality is the gap among households with regards to their
earnings.
_____ 3. Income inequality is the disproportionate distribution of total national
income among households.
_____ 4. Income inequality is measurable.
_____ 5. The government needs to measure income inequality in order to
address the gap among its people.

Summative assessment:
It’s now time to evaluate your learning.

I. True or False: Write T if the statement is True and F if the statement is False.
[1 pt]

_____ 1. Quintile is the 20% proportion of any numerical quantity.

_____ 2. Decile is the 10% proportion of any numerical quantity.
_____ 3. Income equality is the disproportionate distribution of total national
income among households.
_____ 4. Kuznet ratio is one way to measure income inequality.

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

_____ 5. The nearer the value of Kuznets ratio to 1 the greater the inequality.
_____ 6. Lorenz curve is a graph depicting the variance of the size distribution
of income from perfect equality.
_____ 7. In Lorenz curve, the nearer the curve to the line of equality means the
society has well and equally distributed income.
_____ 8. In an intersecting Lorenz curve, the 1st upper line is always the greater
equality.

II. Answer the following questions using the data below.

• A group of 10 people have the following annual incomes: $24,000; $18,000;
$50,000; $100,000; $12,000; $36,000; $80,000; $10,000, $24,000; $16,000.

1. Calculate the share of total income received by each quintile of this distribution.
(Present in table)

2. How much share did the 1st quintile receive (percentage)?

3. How much share did the top quintile receive (percentage)?
4. How many groups are there in quintiles?
5. How many people are there in each quintile?
6. What does the 1st quintile represent?
7. How much income did the bottom 40% receive?
8. Determine the income inequality using Kuznets ratio then explain whether there is
income inequality.
9. Make a Lorenz curve using any of the following: excel, graphing paper or ordinary
paper and describe the income inequality using the figure.
10. If there are intersecting Lorenz curve, how can we decide which one has greater
inequality? Why?

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813
 AE12: Economic Development

Closing prayer:

Dear Lord,

I have invested a great deal in this module with honest and noble intentions. I
have made sacrifices as you have made sacrifices for us. I have used the gifts
you have given me, remained steadfast and focused, and have put my heart
and soul into this module. I pray for intercession and honest reward through
Jesus Christ, whom all good things come from. Amen.

Sources:
Fajardo, F.R., 1994, Economic Development third edition
https://www.merriam-webster.com/dictionary/determinant
https://dictionary.cambridge.org/us/dictionary/english/determinant

Adrian Z. de Lumen
Instructor, AE12
adriandelumen@gmail.com / 09198144813