MethodLogical is now at methodlogical.wordpress.com

MethodLogical is now at methodlogical.wordpress.com

Due to some persistent technical issues we've been having with Blogger, we're now posting at methodlogical.wordpress.com. Please update your RSS feeds, etc. For the time being, our new posts will automatically be mirrored here, but you'll have to visit the new site to comment.

Monday, March 14, 2011

MethodLogical

MethodLogical


Actual and desired wealth distributions

Posted: 13 Mar 2011 11:36 AM PDT

Jeff Smith makes an interesting point about this plot from Mother Jones. It depicts what the distribution of wealth actually is in the US, what people think it is, and what they’d like it to be. But as EconJeff points out, the plots depict the total amount of wealth held constant, and it seems doubtful that the question actually specified that. People would likely imagine that their desired distribution involved more total wealth – increasing the wealth of the middle class at no cost to the rich. Practically speaking, a redistribution would involve less total wealth; it can only be achieved through some kind of tax, and taxes are distortionary.

For the record (in light of our earlier discussions of inequality), I would personally support a hypothetical policy that transformed the top distribution into the bottom one so long as it came at no cost in terms of total wealth, or if the deadweight loss were sufficiently small. As noted above, however, such a policy is basically inconceivable.