Greg Mankiw, Robert M. Beren Professor of Economics at Harvard University, delivered the Hutchinson lecture at the University of Delaware's Lerner College of Business and Economics. E on “The Rise in Entitled "Economic Inequality: Causes and Cures.”

1. The Rise in Economic
Inequality:
Causes and Cures
Greg Mankiw
April 2016

2. Today’s Surprising Politics
“an economy and a
political system that has
been rigged by Wall
Street”

3. Facts

4. GDP Growth over Past 10 Years
0
1
2
3
4
5
6
1957-01
1958-12
1960-11
1962-10
1964-09
1966-08
1968-07
1970-06
1972-05
1974-04
1976-03
1978-02
1980-01
1981-12
1983-11
1985-10
1987-09
1989-08
1991-07
1993-06
1995-05
1997-04
1999-03
2001-02
2003-01
2004-12
2006-11
2008-10
2010-09
2012-08
2014-07
%

5. Source: Goldin and Katz from census data.

6. The One Percent
(Threshold is $423,000 in 2014)

7. Top 0.01 % Income Share
(Threshold is about $9,750,000 in 2014)
Source: Piketty and Saez.

8. An Aside on Mobility
• If your income
is at the 99th
percentile, at
what percentile
should you
expect your
children to be?
• Nature or
nurture?
Source: Chetty et al., 2014.

9. Hypotheses

10. Why Slow Growth?
• The future ain’t what it used to be

11. Why Rising Inequality?
• A tug of war: Education versus Technology

12. A Slowdown in Educational Attainment
Source: Goldin and Katz.

13. The Rising Return to Education
Source: David H Autor, Science 2014;344:843-851

14. Other Reasons for Rising Inequality
• Globalization
• Superstars
• Women’s movement
& assortative mating

15. Trends in the correlation between
husbands' and wives' earnings
Source: Earnings Inequality and the Changing Association between Spouses’ Earnings, Christine R. Schwartz,
American Journal of Sociology , Vol. 115, No. 5 (March 2010), pp. 1524-1557.

16. Policies

17. What can we do?
• Many root causes are nearly impossible to alter
• Except:
• Treating the symptoms

18. 33
22
13
3

19. Optimal redistribution?
• Normative, not positive.
• The Utilitarianism of
Jeremy Bentham (1748-
1832)
• The role of diminishing
marginal utility

20. Questioning Utilitarianism
• Is utility interpersonally comparable?
• What about differences in tastes?
• Revolting(?) implications: Trolley problems
• “Tagging” and the optimal taxation of height

23. One final thought
• Americans living at
the poverty line are
poorer than 85% of
their fellow citizens.
• But they are richer
than 85% of people
in the world.

24. Thank you!