Income Inequality and Scale Independence |
December 10th, 2009 |
politics, money [html] |
Looking around at different ways of measuring income
inequality (which I'm not convinced is a problem in and
of itself: "people start startups in the hope of becoming much
richer than they were before. And if your society tries to prevent
anyone from being much richer than anyone else, it will also prevent
one person from being much richer at t2 than t1") and I see that
"scale independence" is valued in an income inequality metric. I'm
not sure it should be. If you have a society and make everyone 2x
richer, then a scale independent metric would say inequality hasn't
changed. But what if you make everyone 1000x richer? Because the
value of money is not linear in the amount you have (I would rather
have a 50% chance of gaining $1M than a 25% chance of gaining $2M.
Heck, I'd even prefer it to a 25% chance of gaining $3M.), as you
scale incomes up inequality decreases. What I want is an income
inequality metric that is explicitly scale dependent, considering
along with each income the decreasing value of large amounts of
money.
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