Matt Nolan

Will Wilkinson on discussing inequality with those who won’t define it

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I really like this rant by Will Wilkinson, it reminds me of the sort of thing I wish I could write when I’m annoyed.

I’ll be honest, a lot of people out there talking about “let’s tackle inequality” aren’t actually interested in social justice, policy, the poor, or anything that matters – they are interested in looking cool to their friends and fitting into their “in-group”.  Running into these people and trying to discuss policy trade-offs is about as much fun as when, after breaking my leg, my teacher at primary school kept lifting me up to try to get me to stand because “it didn’t look broken” (Note:  She was a lovely teacher, it was just a particularly sore experience).  Here is the opener of his piece:

I’m tired of arguing about inequality. It’s frustrating. It’s unproductive. Nobody is really interested in the analytical arbitrariness and moral insidiousness of measuring intra-national economic inequality. Nobody is really interested in the fact that multiple mechanisms–some good, same bad, some neutral–can produce the same level of measured inequality, rendering the level of inequality, taken in isolation, completely useless as a barometer of social or economic justice. Nobody really cares. Because many different combinations of causes can produce the same level of inequality, it’s not so clear that high inequality, as such, can reliably cause anything. The consequences of inequality depend on the mechanisms driving inequality. Nobody cares.

Now, there is some disagreement from me here. Read more

Matt Nolan

Conceptual introduction to tax-benefit microsimulation

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I am currently writing up a few documents on slightly more technical ideas about income inequality.  For each one I also plan to do a presentation, and attach the presentation slides to this site (along with the document).

I delivered the first one a couple of weeks ago – however, as it wasn’t one that is of public interest I only gave it to a few close economists.  It was on microsimulation models and income analysis.  It was a high level conceptual piece, really just a literature review, but it will act as a start.  The document, and the slides.

This is a form of modelling used to try to understand tax-benefit policy, and the distribution of income, given the fact that people are inherently different!  If you are interested in how I justify the modelling technique with reference to methodology (there is a bit of a discussion of the Lucas Critique in there) you may like to look at the document, but I suspect most readers would find it boring and not particularly useful – which is understandable 🙂

The next one will be on income inequality indices.  I am already part of the way through it, the goal is to write up a bit of a history, build up the idea of thinking about “social welfare” and “need” in terms of these indices, discuss some axioms that we would presume should hold for them, then discuss the individual indices in detail.  Hopefully this will be a bit more exciting.

Matt Nolan

ICT, factor shares, employment, and inequality

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I am going to take you on a journey of a series of fortunate events, and at the end hopefully I have a point!  The journey is below the flap … Read more

Matt Nolan

Policy and heterogeneity: A point

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Via Geoff Simmons came this interesting post about new health policy in New Zealand.  This isn’t my area of expertise, but I found the post really insightful – I’d definitely recommend it as a read.

However, a small part of the post did spark my imagination, and will lead me to write on a loosely related, but important issue.

In the post, when talking about potential issues with the new scheme, the author says:

We hear echoes of the Bolger-led Government adoption of social capital in the late 1990s. Remember that? It placed social problems and their solution-generation with ‘communities’. There is a worthy role for this type of policy in a wider package, but it can also be used as a distancing policy to shield a government and the state from its responsibilities (e.g. on welfare benefits), deflecting the blame and responsibility for solutions to the level of communities.

This is a fair point, words like “community” and “opportunity” are often used by politicians on the right to avoid action.  However, politicians on the left are just as eager to push inappropriate policy at a national level by dismissing these claims.  In truth, the relative importance of “community”/”opportunity” as opposed to nationwide determination of policy depends on our assumption about how different people are – to whip out some jargon, we need an idea about how heterogeneous individuals are with regards to the issue we are looking at.

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Matt Nolan

Discussion Tuesday

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A double-barrelled one today.  Once again, remember that these are points for discussion – I am not saying I agree or disagree with them.

Other people both have more differences, and are more similar, to us than we assume they are when making day to day choices, judgements, and decisions.  Ultimately people are more complex than the rules we use to understand them.

To understand the individual we have to make assumptions.  Acknowledging these assumptions, their usefulness, and their limitations, is important.

Matt Nolan

Are we all confusing status competition and ‘inequality’: Short answer, yes

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The authors of the Spirit Level have done a piece on the relationship between inequality and negative outcomes here.

Now I’ve previously strongly disagreed with the Spirit Level here.  However, I feel that I can discuss this specific post separately – I feel that it is clear and more focused than the book.  I am still unhappy with this post, however I think they have picked the clearest and most fundamental of their arguments to discuss here.

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