Lesson Plan

• Describe the concepts of equity, equality, horizontal equity and vertical equity.
• Explain why governments intervene in markets to address income inequality.
• Compare major policy instruments (progressive tax, means‑tested transfers, public services, negative income tax) in terms of equity, efficiency and feasibility.
• Apply the negative income tax formula to calculate net income for low‑earning households.
• Evaluate the advantages and limitations of the negative income tax relative to other redistribution policies.

• Projector and screen
• Whiteboard and markers
• Slide deck covering equity concepts and policy instruments
• Printed handout with policy comparison table
• Worksheet for negative income tax calculations
• Calculators (or calculator app)

Begin with a striking statistic on income inequality to capture interest. Prompt students to recall last week’s discussion on market failures and how they justify government action. State that by the end of the lesson they will be able to analyse and evaluate specific redistribution policies, including the negative income tax.

1. Do‑now (5'): Quick quiz on equity vs. equality; collect responses.
2. Mini‑lecture (15'): Present key concepts (equity, horizontal/vertical equity) and reasons for government intervention, using slides.
3. Group activity (10'): Students examine the policy comparison handout, identify advantages and disadvantages of each instrument.
4. Calculation practice (10'): Work through the negative income tax example on the worksheet, applying the formula S = k(T – y).
5. Class discussion (10'): Evaluate the NIT against criteria of efficiency, equity, administrative simplicity and political feasibility.
6. Check for understanding (5'): Exit ticket – each student writes one benefit and one drawback of the NIT.

Summarise how the negative income tax blends tax and transfer mechanisms and why it can mitigate the “poverty trap.” Collect exit tickets to gauge understanding, and assign homework: research a real‑world NIT proposal and write a brief critique focusing on equity and fiscal sustainability.