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Friday “Funny”

If the income and wealth of every single American were to double over the next decade in REAL terms, then in a decade, the amount of measured poverty would remain unchanged. You’d also very likely see no change in inequality according to the way most people talk about it, i.e. “the income share of the top x% versus the income share of everyone else.” And we’d therefore “conclude” that economic growth doesn’t end poverty and that economic growth doesn’t alter inequality.

UPDATE: Edited to reflect comment two … my point was supposed to be that the gains to the rich would be larger than the gains to the poor, and out came what I wrote! The point remains of course.

3 Responses to “Friday “Funny””

  1. sherlock says:

    Not sure if you’ve seen this or not, but it’s a great look at how our various starting incomes naturally lead to greater “inequality” measures. It would take actually take a huge effort (and by effort I mean taking from one group and giving it to another) to show measured inequality decreasing. And as always, remember that these measures do not take into account DIFFERENT people being in the various “rich” and “poor” groups over the years.


  2. Evan says:

    I don’t understand how the popular measure of inequality you mention (i.e., income share of the top X%) would change if everyone’s income were doubled. If today the top 1% earn $50 (total) and the remaining 99% earn $50 (total), the “rich” earn 50% of the income. Under your doubling scenario the 1% would earn $100 and the remaining 99% would earn $100, with the rich still earning 50% of the income.

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