Distinguish between equal and equitable distribution of income. Which one is more important and why?
Neha, to understand the difference between the above two concepts, let's first understand the difference between 'equal' and 'equitable'.
Equal means same.
Equality or equitably means fairly (includes the concept of justice and social welfare).
Equal distribution of income means that all the segments of population get the equal same share of national income. This is to say all the people of a country gets the same income. This would mean that an entrepreneur or a professor gets the same income (say Rs 50,000) to that of a labour or a student. In such a situation, nobody would want to take risk of production or undertake a long academic journey.
Equitable distribution of income means that all the segments of population get the amount which is equal to their respective contribution to the production. This is quite fair, since an entrepreneur earns extra (or high) income, since he or she has the dare to undertake the risk. He or she has something in addition (either risk-taking ability, capital, managing capabilities, mental capabilities) which the labour does not has, hence, an entrepreneur should get higher income as compared to labour. Similar is the case for a professor, when compared to a student.
Hence, from the above conclusion, we can state that equitable distribution of income is of more relevance, thereby, more important between the two. Otherwise, no one in an economy would like to undertake or to do something extra, since there would be no incentive and everybody will get the same income share (regardless of whatever they do) either by contributing something or by contributing nothing.
Keep posting!!
Equal means same.
Equality or equitably means fairly (includes the concept of justice and social welfare).
Equal distribution of income means that all the segments of population get the equal same share of national income. This is to say all the people of a country gets the same income. This would mean that an entrepreneur or a professor gets the same income (say Rs 50,000) to that of a labour or a student. In such a situation, nobody would want to take risk of production or undertake a long academic journey.
Equitable distribution of income means that all the segments of population get the amount which is equal to their respective contribution to the production. This is quite fair, since an entrepreneur earns extra (or high) income, since he or she has the dare to undertake the risk. He or she has something in addition (either risk-taking ability, capital, managing capabilities, mental capabilities) which the labour does not has, hence, an entrepreneur should get higher income as compared to labour. Similar is the case for a professor, when compared to a student.
Hence, from the above conclusion, we can state that equitable distribution of income is of more relevance, thereby, more important between the two. Otherwise, no one in an economy would like to undertake or to do something extra, since there would be no incentive and everybody will get the same income share (regardless of whatever they do) either by contributing something or by contributing nothing.
Keep posting!!