I’m tired of arguing about inequality. It’s frustrating. It’s unproductive. Nobody is really interested in the analytical arbitrariness and moral insidiousness of measuring intra-national economic inequality. Nobody is really interested in the fact that multiple mechanisms–some good, same bad, some neutral–can produce the same level of measured inequality, rendering the level of inequality, taken in isolation, completely useless as a barometer of social or economic justice. Nobody really cares. Because many different combinations of causes can produce the same level of inequality, it’s not so clear that high inequality, as such, can reliably cause anything. The consequences of inequality depend on the mechanisms driving inequality. Nobody cares.To Will I say, some people seems to care, at least people writing New Zealand based economics blogs seem to care, but they don't tells us why. The highlighted bits in the Wilkinson quote seems to me to make a couple nice points in that it seems to me that inequality is a useless measure of anything that matters and its not clear, to me at least, what exactly inequality causes.
So will those bloggers among you who are so fired up about the evils of inequality please explain why you are so agitated about it.
Thanks.
9 comments:
Great question. Not holding my breath for an answer.
Hopefully the economists among us have good reasons for worrying about it.
If people are talking about an issue, analysing it and trying to say "what it is" and "what it means" is important. I largely agree with the Wilkinson piece (I have a post up on it on Thursday), but we still need to engage the public.
Talking about inequality is like when people talk about the exchange rate - it is symptomatic of something, rather than the cause.
One of the big issues is that the intelligent lay person has a different definition of inequality than the economist - they see inequality as injustice, we see it as a measure of statistical dispersion in a series. So when they see an "inequality" series, they think economists are talking about injustice - not statistical dispersion. Part of our role should be to communicate about this a bit more clearly ;)
If inequality is a symptom rather than a cause should we not be talking about the cause rather than inequality? What is the cause? Also why should we be concerned about a "statistical dispersion"? What bad things occur because of this dispersion?
"If inequality is a symptom rather than a cause should we not be talking about the cause rather than inequality? What is the cause? Also why should we be concerned about a "statistical dispersion"? What bad things occur because of this dispersion?"
This is the thing - some 'inequality' is good, we should be trying to understand what the real trade-offs are.
http://www.tvhe.co.nz/2013/11/20/some-inequality-is-good/
Of course I agree that we should deal with root causes, but the only way to shift the narrative in that direction is to engage on inequality and clearly define the debate.
At no point has anyone said we should care about statistical dispersion - but the problem is that in the public statistical dispersion and a view of social justice have gotten confused with each other. We can only improve the debate around this by engaging in it, and making this clear.
If we are to understand the trade-offs to do with inequality do we not need to begin by explaining what the bad things to do with inequality are? What are these bad effects?
"If we are to understand the trade-offs to do with inequality do we not need to begin by explaining what the bad things to do with inequality are? What are these bad effects?"
The bad things aren't due to inequality though - 'inequality' is a aggregate used by people in society to describe an interest in looking at issues.
No economist would say we should "target a level of" statistical inequality - they would instead ask what trade-offs exist from redistributive policy, and also ask why the underlying distribution of income (and other welfare relevant variables) has changed.
But if the public is using the term inequality, and is using it to discuss some normative principle they care about, we need to confront that - and try to get people to articulate what they actually mean by "inequality"! We have to define it before we can attempt to say whether it matters ;)
I agree with you that in the media the question of "what" we are actually talking about is ill defined - and when talking about broad "aggregates" no simple single answer would exist.
This is why I've been trying to tell people to be more careful with "inequality" data, and to try to directly admit what policy issues they are trying to solve rather than "targeting inequality". My impression was that other NZ economists have been doing the same.
If I hear economists supporting the Spirit Level view (that measures of static statistical dispersion magically cause bad things) I would be very disappointed.
Matt. I did wonder if anyone would put forward The Spirit Level as an answer to my question, I hoped not but you never know.
You're right about being careful with "inequality" data but how often do you see discussions about the Gini coefficient or some such measure and we are told that its good/bad that its gone up/down.
I wish you luck in getting an sense out of people on what they mean by "inequality"!!
"You're right about being careful with "inequality" data but how often do you see discussions about the Gini coefficient or some such measure and we are told that its good/bad that its gone up/down."
I did an interview on Breakfast a couple of years ago where the Gini coefficient had just gone up, and I was trying to discuss a broader social report on a bunch of issues. After repeatedly being asked how we could get it down I had to say "sorry, but I need to make a point here" and launched into a discussion of why we can't say whether it is good or bad unless we know "why" it has changed, and how that relates to what we value.
There are a lot of people out there who abuse terms like "inequality" to sell their own agenda - if anything, trying to get people to actually define their problem more clearly is a pretty significant step, and is the best we can try to do!
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