10
Dec
11

Only income inequality is interesting?

Eric Crampton finds an instructive discrepancy:

Pity the borderline Asperger’s investment banker who, despite his financial success, seems at a bit of a disadvantage in dating. Reddit posted the 1600 word email that the would-be suitor sent to the woman who dumped him after the first date; it’s since shown up all kinds of places. But folks snickering at it seem an awful lot like a rich one-percenter laughing at a pleading email from a starving man.

[…]

If you’re an egalitarian, what is appropriate policy? Is this guy better or worse off than the poor musician who dates easily? […] If we redistribute income because the investment banker’s last dollar is worth less to him than it would be to the poor musician, think too about the marginal utility of the musician’s last date relative to the banker’s.

I think it’s pretty clear that most “egalitarians” only care about redistributing (someone else’s) income.  In general, income inequality is a proxy for status inequality, and status games won’t go away just because income disparity disappears (see also: high school).  On the other hand, if income disparity disappears, those “egalitarians” who agitate for a spirit level might just find themselves in the new 1% — or expect to do so ex ante.  Otherwise, we’d see a lot more public support for the optimal taxation of height.

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