Deck 5: The Distribution of Wealth and Economic Inequality: Canada and the World

Question 1

What concept refers to the value of an individual's or family's assets minus their debts at a moment in time?

A) Net income
B) Net worth
C) Net liabilities
D) Net value
E) Net credit

Answer 1

B

Question 2

Which of the following assets is not included in the traditional conception of wealth?

A) Bank deposits
B) Income
C) Educational degrees
D) Real estate
E) Consumer durables

Answer 2

C

Question 3

Why is it important to consider the sources of information on the distributions of incomes and wealth among Canadian families?

A) There are significant costs associated with the focus groups in which this data are collected.
B) It is only after in-depth qualitative interviews that informants provide reliable information.
C) Surveys are subject to sampling and non-sampling errors and these are especially important in wealth surveys.
D) Researchers have difficulty controlling for their biases in participant-observation studies of Canadian families.
E) Ethnographies of Canadian families raise important questions about confidentiality and anonymity when studying wealth.

Answer 3

C

Question 4

Why can estimating the shape of the distribution of a variable like wealth involve significant sampling error?

A) Most samples will select too few rich households.
B) Oversampling in the upper tail is unreliable.
C) Most samples will select too few poor households.
D) Oversampling in the bottom tail is unreliable
E) Sampling is generally not effective for highly skewed variables.

Question 5

What type of problem emerges when individuals refuse to participate in wealth surveys?

A) Sampling error
B) Non-sampling error
C) Confirmation bias
D) Type 1 error
E) Type 2 error

Question 6

What form of error occurs because people sometimes refuse to report certain items or make mistakes?

A) Sampling error
B) Non-sampling error
C) Confirmation bias
D) Type 1 error
E) Type 2 error

Question 7

Which of the following claims is accurate regarding misreporting wealth?

A) No value can be assigned in cases where people report they own an asset but do not know its value.
B) A statistical correction is possible in cases where interviewers do not know that the family owns an asset.
C) On average financial assets are reported with surprising accuracy.
D) Financial assets are often under-reported by only about 10 per cent.
E) Non-financial assets such as the value of owner-occupied house is, on average, reported with surprising accuracy.

Question 8

What trend is most evident when considering estimates of Canada's wealth distribution between 1999 and 2012?

A) The real wealth of Canadian families has remained stagnant in recent years.
B) The real wealth of Canadian families declined 4.3 percent per year in light of the global financial crisis in 2008-9.
C) The real wealth of Canadian families increased 73.4 percent between 1999 and 2012.
D) The real wealth of Canadian families peaked in 2008 and then declined.
E) After 2009, the stock market and Canadian house prices have maintained a downward trajectory that has negatively affected Canadians' wealth.

Question 9

In order to get a complete picture about wealth distribution in Canada, what prominent alternative source of information should be considered?

A) Ethnographies of meetings of the Canadian Council of Chief Executives
B) Lists of wealthy Canadians compiled using snowball sampling
C) Tax data from the Canadian Revenue Agency
D) Housing data from the Canadian Housing and Mortgage Corporation
E) "Rich lists" from magazines like Forbes and Canadian Business

Question 10

What is one of the most important reasons to look at "rich lists" when studying the distribution of wealth?

A) Standard sampling tends to overestimate the number of very wealthy Canadians.
B) Household surveys collect information about families, not just individuals.
C) Wealthy Canadians hide their wealth in household surveys.
D) The share of the wealth of the wealthiest Canadians is underestimated by household surveys.
E) They are less fuelled by resentment towards the wealthy.

Question 11

What does it mean that the bottom quintile of the world has a -0.4 percent share of global wealth?

A) Their share of global wealth is decreasing.
B) On average their debts exceed their assets.
C) They lack access to capital to invest in production.
D) They have experienced significant losses from the global financial crisis of 2008-9.
E) Their share of global wealth is increasing.

Question 12

What is the name of a popular measure of inequality used by social scientists?

A) The Gini coefficient
B) The regression coefficient
C) Pearson's correlation coefficient
D) The Humanistic coefficient
E) The Spearman Rank correlation coefficient

Question 13

Which of the following statements is supported by the findings of Shorrocks, Davies, and Lluberas (2014)?

A) The composition of wealth does not vary substantially from poor through middle- to high-income countries.
B) The relative importance of non-financial assets is greater in high-income countries.
C) As development proceeds, the ratio of financial to non-financial assets increases.
D) Debt is relatively more important in poorer countries than wealthier ones.
E) Indebtedness has a consistent effect across countries.

Question 14

Which of the following does not impact current wealth?

A) Gender
B) Past earnings
C) Inheritance
D) Rates of return
E) Age

Question 15

What was the most important factor Davies (1982) found in his decomposition of wealth inequality?

A) Earnings
B) Inheritance
C) Rates of return
D) Age
E) Savings rates

Question 16

Which of the following does not contribute to the concentration in the inheritance of wealth?

A) Practices of estate division
B) Fertility
C) Choice of marital partner
D) The importance of human wealth
E) World wars

Question 17

Ultimately, what is effective in creating a healthy concentration of power in society?

A) Preferential treatment for private firms
B) Being complacent of weak competition policy
C) Special tax breaks to firms
D) Maintaining open and competitive markets
E) Special tax break for "national" or "favourite firms"

Question 18

What is true of the relationship between human wealth and non-human wealth?

A) Human wealth is considerably larger, on average, than non-human wealth.
B) The extremes reached by non-human wealth are exceeded by human wealth.
C) At the highest reaches one can almost say that the distribution of non-human wealth is the distribution of human wealth.
D) High non-human wealth tends to reinforce earnings inequality.
E) Non-human wealth is not a significant component of total wealth.

Question 19

Which perspective would agree with the notion that, provided that wealth has been accumulated honestly, differences in wealth-holding are fair?

A) Libertarians
B) Weberians
C) Socialist
D) Conservatism
E) Marxist

Question 20

Statistics Canada found that the total value of assets in real estate at the end of 2019 was _____________.

A) 53.3%
B) 17.7%
C) 23.2%
D) 40.9%
E) 5.1%

Question 21

_______ totals roughly 30-40% of conventional net worth.

A) Guaranteed Income Supplement (GIS)
B) Old Age Security (OAS)
C) The Canada Pension Plan (CPP)
D) Québec Pension Plan (QPP)
E) Social Security Wealth (SSW)

Question 22

Sampling error is the difference between the ______ and its true ______.

A) Sample value of a statistic, population value
B) Population value, sample value of a statistic
C) Average wealth, population value
D) Sample value of a statistic, average wealth
E) Population value, average wealth

Question 23

Selecting too few rich households in samples can lead to sampling error. How can this problem be addressed?

A) By oversampling the lower tail
B) By undersampling the lower tail
C) By oversampling the upper tail
D) By selecting too many rich households
E) Both C & D

Question 24

Forbes listed 2,153 billionaires in 2019. How many were Canadian?

A) 1.3%
B) 618
C) 37
D) 27
E) 100

Question 25

On Shorrocks, Davies, and Lluberas's (2019) World Distribution of Wealth table, the mean wealth of the US is $420,386. What is Canada's mean wealth?

A) $152, 126
B) $289,781
C) $69,987
D) $420,386
E) $14,101

Question 26

What are the two main sources of wealth?

A) Earnings & Inheritances (including gifts)
B) Earnings & Inheritances (excluding gifts)
C) Earnings & Savings
D) Inheritances & Stocks
E) Earnings & Real Estate

Question 27

How does fertility impact wealth?

A) Fertility does not impact wealth
B) Smaller families allow wealth to remain confined to a small minority
C) Wealth can be broken slowly by division among heirs
D) Wealth concentration would likely be preserved
E) Both C & D

Question 28

Large technology firms dominate the IT world and internet commerce. How can this type of monopoly or, near-monopoly power, be broken?

A) The solution is giving more subsidies to private firms.
B) The solution is being critical of individuals who control large technology firms.
C) The solution is tough and effective competition policy that breaks up monopolies that emerge in this way.
D) The solution is implementing more trade unions.
E) The solution is giving preferential treatment to wealthy individuals.

Question 29

A reasonable degree of wealth mobility may be necessary, if the mechanisms that determine wealth differences in a society are to be regarded as ______.

A) Acceptable
B) Sufficient
C) Fair
D) Healthy
E) Poor

Question 30

Only high-interest debt is included in calculations of net worth.

Question 31

The value of public pension rights like the Canada Pension Plan/Quebec Pension Plan (CPP/QPP) is not included in the traditional definition of wealth.

Question 32

Surveys conducted by Statistics Canada are not subject to sampling and non-sampling error.

Question 33

Sampling error is the difference between the sample value of a statistic and its true population value.

Question 34

The sampling error for medians is generally large since the sample sizes used by Statistics Canada are small.

Question 35

Differential response remains a problem when it is not highly correlated with differential response according to observable characteristics.

Question 36

American studies indicate that, on average, financial assets are often under-reported by up to 40-50 percent.

Question 37

Estimated mean wealth of Canadian families dropped 33.7 percent from 2005 to 2012 largely due to the global financial crisis and decreased house prices.

Question 38

The maximum wealth figures in household surveys are typically in the range of $10-$50 million.

Question 39

The Gini coefficient pertaining to global inequality in wealth has a very low value of 0.911.

Question 40

Canada's Gini coefficient of 0.719 puts it on par with the US and the UK in its level of wealth inequality.

Question 41

Debt represents a greater value of total household assets in the OECD than in low-income countries.

Question 42

One explanation for China's Gini coefficient is that formerly public housing and land in rural areas was distributed on an egalitarian basis in the 1980s and 1990s.

Question 43

As development increases, the ratio of financial to non-financial assets decreases.

Question 44

The older the consumer, the greater tends to be his or her wealth.

Question 45

Unlike labour income, inheritance is not a source of wealth.

Question 46

In his micro-simulation model, Davies (1982) finds that differences in inheritance are roughly similar to differences in age and earnings in impact on wealth inequality.

Question 47

Thomas Piketty (2014) argues that it is unlikely that the annual flow of inheritances will ever reach pre-World War II levels.

Question 48

Under the arrangement of primogeniture, estates are divided equally among children.

Question 49

In Canada today, fertility differences across income groups are not large, so that it likely has a relatively small effect on the concentration of inheritance of wealth.

Question 50

There are limitations to relying solely on households' incomes when determining the distribution of economic well-being.

Question 51

There is significant wealth mobility both within lifetimes and across generations.

Question 52

Some believe there ought to be a broader definition of wealth, which includes the value of public pension rights.

Question 53

Statistics Canada's household surveys do not contribute much information on income and wealth distribution.

Question 54

Sampling error can be avoided by having a smaller sample size.

Question 55

Non-sampling error only occurs from instances where people refuse to be interviewed.

Question 56

The Toronto Stock Exchange composite index began to fall on February 21^st, 2020.

Question 57

Wealth inequality in China has recently increased, and the country has 400 billionaires on Forbes 2019 list.

Question 58

A significant part of wealth concentration can be explained by age in the real world.

Question 59

Piketty (2014) predicted that the flow of inheritances may rebound to the 24% level over the course of this century.

Question 60

It is suggested that one source of power the wealthy can have in society is through political influence, such as funding political campaigns.

Question 61

Downward mobility is never considered acceptable under any circumstance.

Question 62

What is wealth? Give some examples of the different forms of wealth and their relative importance.

Question 63

What is the Gini coefficient? How does Canada's Gini coefficient for wealth compare internationally?

Question 64

What is primogeniture? How does it contribute to the concentration of wealth and how might this trend be changing?

Question 65

What is wealth composed of? Give examples of the sources, and what current wealth is dependent on.

Question 66

How is information about wealth collected in Canada? What are some specific challenges to this approach and how can they potentially affect our understanding of the distribution of wealth?

Question 67

What is the most important factor contributing to wealth inequality? What are its aggregate effects and what forms can it take?

Question 68

What is wealth mobility? How does it affect our perceptions of inequality?

Question 69

Shorrocks, Davies, and Lluberas (2019) found the composition of wealth varies substantially from poor through middle- to high- income countries. Why is this the case? (International Comparisons and the World Distribution of Wealth)

Question 70

In your eyes is there any kind of wealth inequality that is justified? What makes some inequality more justifiable than others?

Question 71

It is argued that assortative mating is breaking down inequality. Do you or your friends notice your social group is especially diverse in terms of wealth? What kinds of activities factor into the formation of your social group?

Question 72

How would you define "fairness" in a discussion about the distribution of wealth? Should we include human and non-human wealth in our analysis? Why or why not?

Question 73

Government subsidies during COVID-19 are partially behind why wealth inequality did not appear to rise in Canada during the COVID-19 pandemic. What do you think might have happened to wealth inequality on an international scale?

Question 74

It has been suggested that the real wealth of Canadian families has risen substantially in recent years. Explain why this might be the case. Furthermore, explain how the COVID-19 pandemic impacted wealth inequality. What factors may have played a role in its impact on wealth inequality?