Economists propose new ways to measure unfair inequality

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New paper Economics reviewIntroducing a new measure of inequality published by Oxford University Press. Under this new standard, the United States is rated as one of the most unequal places in the West. Only Greece has a higher rating. This is driven especially by the structural inequality of opportunities over the years. However, the main cause of inequality across Europe is the impact of the 2010 European sovereign debt crisis.

Since the 1980s, widening income inequality has sparked intense debate. The demand for more redistribution is often opposed by economists who argue that some inequality is needed to make people work harder and may simply reflect the natural consequences of the market economy. increase.

Researchers here argue that standard economic measures of inequality are inadequate to inform this debate. In general, defenders of economic justice distinguish between fair (legitimate) inequality and unfair inequality. Under such reasoning, inequality is unfair if it is rooted in factors beyond someone’s control. People are willing to accept the difference in income from effort rather than the external situation. For example, it is arguably justified that people who work long hours earn more than those who work only occasionally, but how fair is this inequality?

In this paper, the researchers Unfairness Inequality that harmonizes the two ideals of economic equality: equal opportunity and freedom from poverty. This is the first work to combine the widely accepted principles of justice with a joint measure of inequality. Researchers here used a panel survey of income dynamics, a longitudinal survey of American families conducted by the University of Michigan in 1968, to explore the evolution of unfair inequality in the United States from 1969 to 2014. I analyzed it. They combined this data with the European Union. Statistics on income and living conditions to measure unfair inequality in the United States in comparison to unfair inequality in 31 European countries.

The results show that both overall inequality and inequality in inequality in the United States more than doubled between 1980 and 2014. The rate of inequality increased from 15.2% to 18.9%. This trend was primarily caused by the growing inequality between groups with different socio-economic backgrounds. The increase in inequity in the United States is primarily due to increased violations of the principle of equal opportunity and reduced social mobility across generations.

Researchers also compared inequality between the United States and 31 European countries in 2010. Absolutely, the United States has the second highest level of unfair inequality after Greece. Still, treating a state in the southern United States as a separate country will bring about the highest level of unfair inequality in all countries. The countries with the least unfair inequality are the Nordic countries and the Netherlands. The European countries with the highest measures of unfair inequality are Greece, Portugal, Romania, Spain and Italy, especially those affected by the European debt crisis.

These findings show that in 2010, unfair inequality in the United States had a different structure than European society. Inequality in these European countries is mainly caused by violations of the principle of freedom from poverty, while inequality in the United States is mainly caused by violations of the principle of equal opportunity.

“We have developed a new measure of unfair inequality based on the concept of equal opportunity and liberation from poverty,” said Andreas Paihill, lead author of the paper. “This new benchmark is Income inequality It’s not necessarily a bad thing in itself. Instead, we propose to analyze the causes of inequality and break them down into fair and unfair elements. In this task, inequality is considered unfair if people have unequal opportunities or lack resources to achieve their goals.This new measure will enable researchers to carry out more normatively guided analysis of inequality in the future. inequality.. ”

Analysis shows that Scotland is more egalitarian than England, but inferior to the Nordic countries.

For more information:
Paul Hufe et al, Measuring Unfair Inequality: Equal Opportunity and Coordination of Freedom from Poverty, Economics review (2022). DOI: 10.1093 / restud / rdab101

Quote: Economists have unfair inequality (February 22, 2022) obtained from https: // on February 22, 2022. Propose a new way to measure

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Economists propose new ways to measure unfair inequality

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