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Relative Income

Definition

Relative income refers to an individual's income compared to others within a specific group or society. It focuses on the relative position rather than the absolute amount earned by an individual.

Analogy

Imagine you're playing a video game where your score is determined not only by how many points you earn but also by how well you perform compared to other players. Your relative income is similar - it's not just about how much money you make but also about where you stand compared to others.

Related terms

Income Inequality: Income inequality refers to the unequal distribution of income among individuals or households within a society.

Poverty Line: The poverty line is a threshold set by governments or organizations that determines whether someone is considered living in poverty based on their income level.

Disposable Income: Disposable income is the amount of money left after taxes and other mandatory deductions. It represents the income available for spending or saving.