Being up Front about Income Inequality
35 Pages Posted: 13 Jan 2020 Last revised: 15 Oct 2020
Date Written: January 7, 2020
This paper proposes universal provision of information about the income inequality involved in the creation of a good as a means of moderating income inequality. Existing evidence suggests that a section of the population would be willing to pay more for goods whose production involves less excessive income inequality. We show, on a simple model, that supplying inequality information to such a population under competitive markets will in general lead to a reduction in global income inequality. The effect will be stronger the more inequality averse the population. Moreover, the outcome will be socially efficient. Possibilities for (de-centralized) implementation are also discussed.
Keywords: Income inequality, information provision, externalities, inequality aversion
JEL Classification: D63, D83, D3, J3
Suggested Citation: Suggested Citation