Saturday, November 7, 2009

Some inequalities are more equal than others

So income inequality trends might not be as bad as we thought.  Or maybe this preliminary finding is wrong and they are as bad as we thought.  Who knows, and who cares?

No one but economists know or care about a Gini Coefficient.  The only measure of income inequality that matters to anyone else is perception, not some precisely measured abstract measurement of reality.  Do the poor FEEL rich, and do they FEEL like the super-rich are TOO rich?  These are subjective and amorphous concerns.  They're the reason why we get all worked up over the fraction of a percentage point of the AIG bailouts that went to executive bonuses instead of the bailouts themselves.

Pretty much the biggest financial risk for poor folks is health care spending.  If we can improve that facet of economic life, then the poor should feel a lot richer... no matter what the actual inequality numbers are.

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