Putanumonit: Contra Noah Smith's bad argument for a good cause

Jacob Falkovich

The most interesting thing here (I think) is the proposal to measure inequality by computing a Gini coefficient on log incomes rather than raw incomes. This seems like a fairly natural thing to do and it seems plausible that it produces a metric that does a better job of identifying actually-harmful inequality. But isn't the fact that scaling all incomes by a constant factor -- hence adding a constant to all the log-incomes -- changes the metric a fatal objection?

Does anyone have a reasonable argument for when inequality is worse than absolute poverty, and what decisions one should make based on a dispersion measure in the first place? IMO, the fatal objection is that it's pointless to pick a measure without being able to describe its use.

edit: this model should also include a reasoning that it makes ANY sense to measure by national boundary, as opposed to globally, by language group, by age cohort, or some other natural grouping.

0Luke_A_Somers9y

What would a natural choice of 0 be on that log? I would nominate bare subsistence income, but then any person having less than that would completely wreck the whole thing. Maybe switch to inverse hyperbolic sine of income over bare subsistence income?

0Jacob Falkovich9y

I don't know if it's a fatal objection, it's the main thing differentiating Logini from regular Gini. Logini isn't a "pure" measure of inequality, but I argue that measuring pure inequality is not very useful. First of all, there's no such thing as "pure inequality". Gini measures just "reported income, within country, household aggregated" inequality or something equally full of caveats. Asking for inequality without qualifications or context gets you nowhere, so why not combine absolute prosperity with income distribution? I don't think Logini is a better econometric formula in some abstract sense, just that it correlates closer with what we should care about (life quality).

1

Putanumonit: Contra Noah Smith's bad argument for a good cause

1

1

1

Putanumonit: Contra Noah Smith's bad argument for a good cause

1

1