wealth gap
The disparity in asset ownership and net worth between different segments of the population.
Example
“The wealth gap between the top 10% and bottom 50% has widened significantly since 1980.”
Memory Tip
GAP — a chasm between those with wealth and those without.
Why It Matters
Understanding the wealth gap helps you recognize systemic financial challenges that affect your own financial planning and opportunities. It influences policy decisions that impact interest rates, job availability, education costs, and access to credit, all of which directly affect your personal financial situation and long-term wealth building potential.
Common Misconception
Many people believe the wealth gap is primarily about income differences, but it actually focuses on accumulated assets and net worth over time. Two people earning the same salary can have vastly different net worth due to inherited wealth, property ownership, investments, and historical access to financial opportunities.
In Practice
In 2023, the median white family in the United States had a net worth of approximately 188,000 dollars while the median Black family had a net worth of around 24,000 dollars, despite similar income levels in some cases. This gap persists because factors like homeownership rates, generational wealth transfer, and historical discrimination in lending create compounding advantages for some groups over decades.
Etymology
From Old English 'wela' meaning well-being, plus Old Norse 'gap' meaning a chasm.
Common Misspellings
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See Also
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