⚖️ Equity vs Equality vs Efficiency
These three concepts are at the heart of the IB specification — and students often confuse them. Let's clear that up.
- Equity — what most people consider 'fair'. This is subjective and debated.
- Equality — a more extreme condition. Perfect equality would mean everyone earns the same.
- Efficiency — getting the most out of available resources.
The key trade-off: Equity and efficiency often conflict. A perfectly efficient market may produce very unequal outcomes. Redistributing to improve equity (e.g. high taxes) may reduce efficiency (e.g. lower work incentives).
Equity ≠ equality. Equity means 'fairness' (which people disagree on). Equality means 'same for everyone'. The IB specifically asks you to distinguish between these.
Free preview
This is the free notes preview
You're reading the free notes. Aimnova Pro unlocks the full study experience — and you can try it free for 7 days:
- FlashcardsLock in vocabulary and key terms with spaced repetition.
- Practice questionsAnswer exam-style questions and get instant AI marking.
- Mock exams & past-paper vaultSit full mocks and see exactly how examiners award marks.
- Personalised study planA daily plan built around your exam date and weak areas.
Start your 7-day free trial Full access to Aimnova Pro · cancel anytime
📈 The Lorenz Curve
Definition: The Lorenz curve shows how far a country's income distribution deviates from perfect equality.
How to read the diagram
- The 45° line (line of perfect equality) shows what the distribution would look like if everyone earned exactly the same income.
- The Lorenz curve bows below this line. The further it bows, the more unequal the distribution.
- The area between the line of equality and the Lorenz curve represents the degree of inequality.
Reading the curve: If the bottom 50% of the population earns only 20% of total income, the Lorenz curve passes through the point (50, 20) — far below the 45° line. This indicates significant inequality.
You must be able to draw the Lorenz curve in an exam. Label the axes: cumulative % of population (x), cumulative % of income (y). Draw the 45° line first, then the bowed curve below it.
Study smarter, not longer
Most students waste 40% of study time on topics they already know. Our AI tracks your progress and optimizes every minute.
Try Smart Study Free7-day free trial • No card required
🔢 The Gini Coefficient
Definition: The Gini coefficient.
Interpreting the number
- 0 = perfect equality (Lorenz curve lies on the 45° line).
- 1 = perfect inequality (one person has all the income).
- Lower Gini = more equal distribution (e.g. Scandinavian countries ≈ 0.25–0.30).
- Higher Gini = more unequal distribution (e.g. South Africa ≈ 0.63, Brazil ≈ 0.53).
Calculation link to Lorenz curve
Gini = Area A ÷ (Area A + Area B), where Area A is between the 45° line and the Lorenz curve, and Area B is below the Lorenz curve. You won't need to calculate it, but you must understand the link.
When the Lorenz curve shifts closer to the 45° line, the Gini coefficient falls (more equality). When it bows further away, the Gini rises (more inequality). Use this to explain policy effects.