Syllabus: AQA A-level Economics
Module: Individuals, Firms, Markets and Market Failure
Lesson: 4.1.7 Distribution of Income & Wealth Poverty and Inequality

Introduction

This lesson, drawn from AQA A-level Economics Section 4.1.7, directly tackles the distribution of income and wealth, and the critical topics of poverty and inequality. Aligned fully to the AQA specification​, it equips students to think critically about disparities in economic outcomes, a theme increasingly important in real-world economics and assessments. Teachers will be helping students not only build exam-ready knowledge but also foster a deeper understanding of policy debates shaping today’s world.

Key Concepts

• Income vs Wealth: Distinction between income as a flow of money and wealth as a stock of assets.

• Inequality Metrics: Use and understanding of tools like the Gini coefficient, Lorenz curves and quintile ratios.

• Causes of Inequality: Education, ownership of assets, discrimination, taxation systems, and market structure.

• Poverty: Absolute vs relative poverty, poverty lines, and the economic and social consequences of poverty.

• Government Policies: Methods to reduce inequality and poverty such as progressive taxation, minimum wages, welfare payments and provision of public services.

• Market Failure: Understanding inequality as a form of market failure and the justification for government intervention.

These points are explicitly syllabus-aligned, ensuring students cover the necessary theory and application​.

Real-World Relevance

Recent UK data from the Office for National Statistics shows that income inequality, measured by the Gini coefficient, rose slightly during 2023. The COVID-19 pandemic exacerbated pre-existing wealth divides, particularly through disparities in asset ownership (e.g., housing wealth rising sharply among higher earners). Real-world case studies such as the effect of Universal Credit reforms or the introduction of a national minimum wage increase provide current, tangible examples to use in class discussions.

Mini Case Study:
“Housing Wealth and Inequality”: Post-pandemic, property price surges widened the wealth gap between homeowners and renters. Students could explore how policies like Help to Buy aimed to address this, but often increased demand more than supply, exacerbating the issue.

How It’s Assessed

Students will encounter data response questions, essays, and short-answer questions related to poverty and inequality. Typical AQA command words include:

• Analyse: “Analyse the impact of taxation on income distribution.”

• Evaluate: “Evaluate policies aimed at reducing income inequality in the UK.”

• Explain: “Explain the difference between relative and absolute poverty.”

Examiners are looking for:

• Clear definition of key terms.

• Application to real-world examples.

• Evaluation of different policies with a balanced argument.

• Use of relevant diagrams (e.g., Lorenz curves).

Practice tip: Encourage students to practise writing essays with at least two points of evaluation and a justified conclusion to meet AQA’s high-level mark bands​.

Enterprise Skills Integration

Teaching this topic naturally builds:

• Problem-solving: Students tackle the real-world challenge of how best to address inequality.

• Decision-making: When evaluating different government policies, students practise weighing costs and benefits.

• Critical thinking: They question assumptions about fairness, efficiency, and social justice.

Enterprise Skills’ internal tool MarketScope AI can be used to simulate how changes in government policy (e.g., altering tax rates) affect income distribution in different scenarios, bringing abstract concepts to life in a practical, visual way​.

Careers Links

Understanding income distribution and inequality is vital for careers in:

• Public Policy (e.g., civil service economists)

• Finance and Banking (e.g., understanding social impacts of lending)

• International Development (e.g., NGOs tackling poverty)

• Law (e.g., human rights and social justice advocacy)

• Research and Academia

This topic aligns closely with Gatsby Benchmarks 4, 5 and 6, offering students a strong bridge between curriculum content and real-world careers​.

Teaching Notes

• Common Pitfalls: Students often confuse income and wealth, or oversimplify causes of inequality. Build early precision into definitions.

• Scaffolding: Use clear graphic organisers to help students categorise causes, consequences and policy responses.

• Discussion Activities: Run structured debates on policy solutions to poverty – this strengthens critical analysis skills.

• Extension Ideas: Encourage more able students to research global inequality trends (e.g., comparing the UK with Scandinavian economies).

• Differentiation: Provide starter data sets for data interpretation tasks and stretch tasks involving manipulation of Gini coefficients for advanced learners.

• Resources: Recommend Enterprise Skills’ Policy Debate Toolkit for ready-to-use classroom simulations based on real government dilemmas​.