Which statement about wealth concentration versus income concentration is accurate?

• A. Income concentration is typically more unequal and persistent than wealth concentration.
• B. Wealth concentration is less persistent than income concentration.
• C. Wealth concentration is typically more unequal and persistent than income concentration.
• D. Wealth concentration and income concentration are unrelated.

Answer: (C)

Think of wealth as a stock and income as a flow. Wealth accumulates over time through savings, investment returns, and transfers from one generation to the next, so a small group can steadily accumulate a large share of assets. Those assets then continue to generate returns, reinforcing the gap year after year. That compounding makes wealth inequality both large and long-lasting, often persisting across generations.

Income, by contrast, is the annual money people earn and can be more variable because it depends on jobs, market conditions, and policy changes. While income can be unequal, it tends to be more reversible and easier to affect with changes in work, taxes, and transfers, so gaps don’t stick as stubbornly as gaps in wealth.

So the statement that wealth concentration is typically more unequal and persistent than income concentration aligns with how accumulating assets and bequests create enduring disparities, while income gaps are more subject to change.