Of safety nets and inequality

Kenworthy responds to the core of Wilkinson’s argument. Kenworthy says income inequality matters because outcomes are determined by luck. Its not fair that two people of equal talent, who both worked hard in school, etc, etc should have different outcomes because one was lucky enough to “have a friend in the business” or won the lottery.

To me, this is an argument for a social safety net not for income redistribution. Most people I know are happy for the people that win lotteries. Nobody bemoans others’ good fortunes. However, most people I know dislike when people hit dire straights because of bad luck. It is unfair for people that have worked hard to be knocked down too far.

Good thing that you don’t have to believe “most people I know”. Experiments have shown that people have preferences for efficiency not for equality.

The difference matters for policy because policy makers should give more weight to policies that increase growth rates even if they increase inequality and less weight to redistributive policies.

6 thoughts on “Of safety nets and inequality”

  1. Haven’t there been some studies showing that many lottery winners are actually less happy a few years down the road?

    Why should hard work be valued?

  2. All else being equal, why do we value hard work over productive, effective work? Does suffering give it moral credence?

  3. Steve, no it doesn’t. It suggests that policies that trade growth for equity aren’t smart. I didn’t say anything about there being a necessary trade-off.

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