Inequality Questions

Oct 30, 2011 • Behavioral Economics, Developing Economies, Economic Debates, Economic History, Economic Thinkers, Government, Households, Macroeconomic Measurement, Thinking Economically • 106 Views    No Comments

Astoundingly, the country in which we are born determines 60% of our income. And then, the next 20% relates to our parents’ affluence.

Here are some answers to other interesting questions we never knew we wanted to ask. All are from The Haves and the Have-Nots.

  • Who was the richest person ever to have lived? Probably John D. Rockefeller. Looking at average income figures, the ratio of Rockefeller to the average was 116,000 to 1.
  • Compared to the world, how high is your income? Calculating Purchasing Power Parity (PPP-The Haves and the Have-Nots, p. 166), to be in the world’s top quintile, your PPP, $5,000. The top 1%? PPP is $34,000.
  • What was Anna Karenina’s upward mobility? Having had modest origins, marrying a successful civil servant elevated her to the top 1% of Russian society. Continuing to climb, her relationship with Count Vronsky took her to a man at the very top. Whereas her husband’s annual income was probably close to 9,000 rubles a year, her lover’s was 100,000.

The Economic Lesson

Through the scholarly side of The Haves and the Have-Nots, economist Branko Milanovic suggests using 3 questions to assess the impact of inequality.

  1. Identify the cause of inequality. For example, determine whether income inequality increases or decreases as the economy grows.
  2. Identify the impact of inequality. For example, does inequality create positive or negative economic incentives?
  3. Identify the ethical implications of inequality. For example, are there good and bad ways to have ascended to affluence?

An Economic Question: Being aware of your bias about income inequality in the US, how would you answer Milanovic’s 3 questions?

 

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