Question

A huge issue in modern society which has received a lot of attention is income inequality. Briefly explain how this issue relates to consumer confidence and social mobility.

Answer 1

Consumer confidence measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. In an unequal society, consumer confidence can vary significantly based on an individual’s finances. For consumers hailing from a low SES background, there is likely to be less confidence in the immediate and near future economy and their personal finance, because of which the consumer maybe compelled to save more than spend. Social inequality also has a role to play when it comes to social mobility. More specifically, inequality in society is negatively related to the ability of its members to improve their SES in their lifetime. The danger is that inequality and low mobility become locked into a self-perpetuating cycle.