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Why Income Inequality Matters

The Economist complements this week’s?print issue on rising income inequality with an online forum on the subject. Daron Acemoglu explains why we care about income inequality: “First, people’s well-being may directly depend on inequality, for example, because they view a highly unequal society as unfair or because the utility loss due to low status of the have-nots may be greater than the utility gain due to the higher status of the haves. Second and more importantly, equality of opportunity may be harder to achieve in an unequal society … Third and most importantly, inequality impacts politics. Economic power tends to beget political power even in democratic and pluralistic societies.” Meanwhile, Mark Thoma argues that inequality may soon restrict growth: “We may be near or even past the level of inequality where growth begins falling. The evidence on this is highly uncertain, so it’s difficult to say. But a few more decades like the last few could make the difference, so why take a chance?” [%comments]


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