The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. – F.A. Hayek
Posted in Inequality on Jan 20th, 2012
Imagine a 20 person economy. In this economy, we can arrange all of the income earners from lowest-earning to highest earning in increments: Person 1 $10.00 Person 2 $10.50 Person 3 $11.03 Person 4 $11.58 Person 5 $12.16 Person 6 $12.76 Person 7 $13.40 Person 8 $14.07 Person 9 $14.77 Person 10 $15.51 Person 11 [...]
Posted in Development, Inequality, Voluntary Society on Nov 15th, 2011
Just finished a book called Company Town: The Industrial Edens and Satanic Mills that Shaped the American Economy. I was uninspired by the book, but it did contain several interesting histories of companies such as Kohler, Hormel, Corning and Hershey that people may find useful. One theme that is woven throughout the book, but not [...]
Posted in Inequality on Sep 16th, 2011
Imagine that you are someone who is very concerned about high levels of income and consumption inequality. Furthermore suppose you believe that appropriate remedies to this, and also a matter of social justice, is to tax these people a lot more. How would your views change if all of these super-rich people were identical to [...]
Posted in Inequality on Sep 15th, 2011
Just a few days ago the US Census released its annual estimates of poverty counts in the United States, along with updates in various income measures. The data were not pretty. Poverty rates are at levels not seen in 20 years and it appears that the income of a typical household has not budged much [...]
Posted in Inequality, Methodology on Aug 4th, 2011
There are four broad classes of measures used to capture, via a simple summary statistic, what an income distribution “looks like” and how it changes. In a country of 310 million people it is easy to understand why we rely on such summary statistics. But as with all statistics, we ought to be very careful [...]
Posted in Inequality on Aug 2nd, 2011
In yesterday’s post, we showed how inequality in the U.S. has increased by 18% over the previous 40 years according to the most commonly cited measure of inequality, the Gini Coefficient. In tomorrow’s post what we’d like to see from an inequality statistic in an ideal world. Today, I wanted to illustrate how this measure [...]
Posted in Inequality on Aug 1st, 2011
The chart below depicts a measure known as the “Gini Coefficient” for the entire United States from 1967-2009: This is the image that people typically have in mind when they make claims that inequality in the United States is increasing. By this measure called the Gini Coefficient, it appears that income inequality increased by about [...]
Posted in Inequality, Methodology on May 5th, 2011
Let us examine how economic growth alters the way we observe and think about the “distribution” on income within a country. Below I present four examples and for each example I would like for you to think about which country you would “prefer.” What do I mean by prefer? You can think of it as [...]
Posted in Inequality on Feb 8th, 2011
Yesterday we left off by agreeing that the hypothetical two person society we created suffered neither from objectionable income nor consumption inequality (we’ll have a philosophical discussion on the whole topic in the future), despite what the various ways of looking at inequality suggested. How would you feel, however, if you drilled down to the [...]
Posted in Inequality on Feb 7th, 2011
On Friday, I left us off with the comment that using consumption as a measure of inequality, at least in the example I provided, would not be much more satisfactory to using income inequality. According to my example, in 2011, Will would be spending $25,000 and Petey would be spending $50,000 on consumption goods. But [...]
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