Horizontal inequality is the inequality—economical, social or other—that does not follow from a difference in an inherent quality such as intelligence, attractiveness or skills for people or profitability for corporations. In sociology, this is particularly applicable to forced inequality between different subcultures living in the same society, i.e inequalities between culturally formed groups, not economically formed ones.[1]
In economics, horizontal inequality is seen when people of similar origin, intelligence, etc. still do not have equal success and have different status, income and wealth.
Traditional economic theory predicts that horizontal inequality should not exist in a free market. However, horizontal inequality is observed in real and simulated 'free market' systems. The Pareto optimal economy is one traditional approach to the problem. Even in simulated systems, inequality of perfectly identical actors arises, to give "the rich and poor".[2]