Monday, August 6, 2012

On Inequality in the US

Dan Airely writes in The Atlantic about inequality in the US and how it corresponds to what we think it is and what we want in terms of an ideal income distribution.  Here it is in one neat graph:

Each column is a quintile of the population arranged from poorest to richest.  The height of the bars is the percentage of the income each quintile earns.  To fix ideas, in a completely equal society, each quintile would earn exactly 20% of the income.  From this you get a pretty good idea of how unequal the US really is (white bars).  What is interesting is how unequal the typical American thinks we are (the striped bars) - the typical American has a wildly inaccurate view of reality.  And perhaps even more interesting is how the typical American would ideally like the nations inequality to be.

Airely started with Rawls' concept of a just society being one in which a person would be willing to be inserted at random and then asked respondents to describe an income distribution into which they would be willing to be randomly inserted.  The results are above and are quite different from the reality and the perceived reality.

There is one problem with the way the question was asked, however, which is that most Americans don't think that randomness has much to do with where you are on the income distribution, I suspect.

Robert Frank in Sunday's Times writes about luck versus talent and effort and suggests that luck may have a lot more to do with success than we like to believe.  How much you believe this probably shapes how you fell about equality (not the only thing of course, much of it is a moral judgement regardless of luck).

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