Read: December 28, 2024 @ 23:05 Source: [Does Wealth Inequality Matter for Growth? The Effect of Billionaire Wealth, Income Distribution, and Poverty (Bagchi & Svejnar, 2013)](https://docs.iza.org/dp7733.pdf) --- # *Wealth* Gap Matters, When it's *Politically Connected* When considering the graph image that everyone has in their mind when someone brings up the gap between the rich and the poor, the important distinction to make here is that there is a difference between the "*income*" gap and the "*wealth*" gap. These authors found, after establishing ways to measure meaningful distinctions between wealth and income, and *politically connected* and *unconnected wealth*, that whether or not this gap matters when concerning the growth of the economy, these distinctions *do matter*. When just considering income inequality, the effect was either insignificant or even positive. However, a massive *wealth* gap *does matter*. But it only matters when the wealth is **politically connected** - which makes logical sense, if you think about it. Politically connected wealth can influence government investment in certain areas of the economy, stifle competition and innovation, and other such anti-growth practices in a market economy.