A widening gap in income distribution is currently fuelling protests in the United States, the UK and elsewhere. Economies burdened by increasing political unrest, rising national debt and high unemployment rates (particularly in wealthy countries) are directly affected by the difference of income levels.
Market research company Euromonitor International announced the publication of its income inequality, The Haves and Have Nots - The Impact of the Widening Gap between Rich and Poor, examining these issues surrounding income disparity and comparing markets worldwide and how their levels of income inequality impact social conditions, consumer lifestyles and overall economic progress.
A sign of the growing gap between the rich and poor is the increase in the number of high net worth individuals (HNWIs) - those having investable assets of US$1 million or more. Globally, their financial wealth increased by almost 10% in 2010, reaching US$42.7 trillion. This gap is expected to increase over the forecast period, despite recent social unrest, according to the report.
In many emerging and developed countries, those high-income households representing 10% of the population, command well over 40% of total disposable income. This disparity also affects overall consumption patterns. "Those households that see their overall income rise increase their spending in areas like technology, financial services, luxury goods and other discretionary purchases; whereas households with lower levels of disposable income allocate a larger share of their money to essential items like food, beverages and clothing," says editorial director Gina Westbrook. "This allows for further segmentation by marketers and offers opportunities for both ends of the spectrum - luxury and budget options."
The income gap between the rich and the poor, or the "haves" and "have-nots" also creates extreme pressure on resources and public health expenditure. Inequality is also linked to problems related to shorter life expectancies, higher disease rates, crime, higher infant mortality, obesity, teenage pregnancies, emotional depression and others.
"It is possible for governments to help narrow the gap between rich and poor by introducing various redistribution mechanisms, such as social welfare programs, minimum wage legislation, higher taxes for the rich and better educational opportunities for the poor," says Westbrook. "However, many governments are trying to tackle their growing debt troubles, leaving very little financial room for investing in efforts to ease the plight of the poor."
The 72-page report looks at consumer spending priorities, political and economic structures in various markets, and how a move toward less egalitarian societies are influencing consumer behavior particularly in Brazil, China, France, Germany, Japan, Russia, the UK and the US.
Euromonitor International is the world's leading provider for global business intelligence and strategic market analysis. We have more than 39 years of experience publishing international market reports, business reference books and online databases on consumer markets.
Euromonitor International is headquartered in London, with regional offices in Chicago, Singapore, Shanghai, Vilnius, Santiago, Dubai, Cape Town, Tokyo, Sydney and Bangalore, and has a network of over 800 analysts worldwide.
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