Never Mind the Gap: Why we shouldn’t worry about inequality
54 Pages Posted: 3 Jun 2021
Date Written: May 23, 2016
There remains a debate about the true level of wealth inequality in the UK, but the trends do not conform to the story of unprecendented or spiralling inequality that are frequently implied in the media. Wealth inequality recently widened for the first time in a decade. However, this was primarily due to housing wealth. A strong focus on inequality within nations obscures the fact that global income inequality has been falling. Net wealth inequality figures at a global level give a misleading picture of poverty and inequality. They fail to account for the demographic composition of the global population and imply, for example, that a rich westerner with large debts but few assets would find themselves at the bottom of the global distribution. The overwhelming focus on summary statistics of income or wealth at a given point in time perpetuates two misconceptions – namely, that a distribution can be easily controlled and that the economy is a zero-sum game. In reality, inequality statistics reflect the results of millions of individual interactions, exchanges, endowments and policies. Affecting a distribution of income or wealth inevitably means interferring with some of these trades or interactions.
Keywords: UK, Britain, economic development, inequality, wealth, income inequality, welfare, development
JEL Classification: N34, O40, E61, D31, D39, D30, D63, D61
Suggested Citation: Suggested Citation