Feed on

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 given that each of them earned $50,000 in that year, would you want to point to those consumption statistics and call it “inequality” and to go further, then to apply some ethical judgment to it?

The “problem” of consumption inequality, at least as I measured it in this example, is that it does not capture the potential for people to be consuming. In this simple two person world, in the year 2011, although actual consumption levels were different by a factor of 2, each individual had the same capacity to consume. In this, we must assume that each faces the same choices in terms of availability and prices of all goods and services, including savings vehicles.

Suppose you are comfortable with this, and argue that we can measure this capacity, and that you’d be OK saying that in this world there was no inequality. What other flies lie in the ointment? Come back tomorrow to see.

2 Responses to “Income Inequality, A Continuing Series”

  1. Harry says:

    There are more flies in the ointment than clung to my screen door when we had cows, all of them wintercows.

    None of my cows were ever treated equally. They got fed according to what they produced. That is not to say we did not treat them inhumanely, or unfairly, according to an armchair farmer from Princeton.

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