Thursday, October 27, 2011

How Much Is Income Inequality and How Much Is Effort Inequality?

Mark Perry point out that the rich* bring in 15 times as much income as the poor. But, the rich also have 5 times as many jobs, making the extent to which their income is unequal 3:1 instead of 15:1.

Note that students want a premium for effort included in their grade when it might help them, but that the tax code doesn’t allow households to discount for effort when it might help them.

* The rich are defined by the average household income of the top income quintile, and the poor by the average household income of the bottom income quintile.

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