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101 lecture income inequality
This document discusses income inequality and different perspectives on fairness. It presents two definitions of fairness - redistributive fairness, which sees inequality as inherently unfair and advocates equalizing rewards, and meritocratic fairness, which believes fairness means matching reward to merit. The document also discusses measurement challenges, how governments can impact inequality through policies, and strategies to help the poor.
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101 lecture income inequality
- 1. Microeconomics Income Inequality Rich and Poor Rich and Poor
- 2. Rich and Poor Relative Subjective Measurement limitations
- 3. What would yourather be? Rich in poor country or Poor in a rich country
- 4.
- 5. 2013 vs. 1953 CellPhone Entertainment Internet CarHousingFood Air Conditioner Opportunities Jet Travel Medicine
- 6. Income must becreated before it can be distributed Entrepreneurs use capital to create income
- 7. Capital Financial -Money Physical - Things Intellectual - Ideas Human - People
- 8. Market is Efficient May not be fair Who defines fair?
- 9. Fairness is not an objectively determined concept Milton Friedman (1912 - 2006)
- 10.
- 11. Redistributive Fairness It isfair to equalize rewards. Inequality is inherently unfair.
- 12. Meritocratic Fairness Fairnessmeans matching reward to merit. Forced equality is inherently unfair
- 13. The worst formof inequality is to try to make unequal things equal. – Aristotle – Aristotle – Aristotle
- 14. THE REAL QUESTIONis not whether fairness matters it does... but which definition is correct for public policy.
- 15. Quiz 1. What isRedistributive Fairness? 2. What is Meritocratic Fairness?
- 16. Government can make income more equal Distorts incentives Alters behavior Less efficient allocation
- 17. How much inequality? Whatcan government do? How to help the poor How to help the poor How to help the poor
- 18. Quintile Lineup by income One-Fifth Divide into five groups
- 19. Income Inequality byQuintile MENA Percent of Income Perfect Equality
- 20. Poverty Line A levelof income set by the government below which is deemed to be in poverty
- 21. Poverty Rate The percentage of the population living below the poverty line
- 22. Percent Below Poverty Line Egypt 20 Gaza 70 Iran 18 Iraq 25 Jordan 14 Syria 12 UAE 19 Yemen 45
- 23. The Income Lifecycle Peak at 50 Earning + Level Spending Varies $0 - Go to Work Retire Born Age Die
- 24. Consumption Gap Top 20% to Bottom 20% Unadjusted Income 15 x After Taxes 14 x Consumption 4x Household Size 2x
- 25. What percent of millionairesinherited their wealth? 20% Inherited 80% Earned