tag:blogger.com,1999:blog-279146381231845671.post8863221206927647119..comments2023-08-16T04:32:23.376-07:00Comments on Bad Outcomes: Piketty ThoughtsRobert H.http://www.blogger.com/profile/09454933755396275755noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-279146381231845671.post-41121315026840296102014-05-16T13:37:48.181-07:002014-05-16T13:37:48.181-07:00This is tangential to your post, but I do wonder a...This is tangential to your post, but I do wonder about the argument that: <br /><br />"Piketty gets it wrong to focus on the living standards of the poor relative to the rich rather than focusing primarily on the living standards of the poor, full stop"<br /><br />To play devils advocate, suppose that we model welfare as being two-part, a 'living standards, full-stop' (or absolute) part and a relative living-standards part. I think that many supporters would believe that (for the majority of the population in OECD countries at least) there are diminishing marginal returns to the absolute portion as average wealth increases, but NOT (or at least less so) to the relative portion. Or to put it another way when we're both homeless I'd gladly let you live in a nice house if it let me live in a hut, but when we both already live in nice houses I would resent living in a mansion if it meant you got to live in Versailles. My need to keep up with the Jones' doesn't change, but my need for increasing living standards does (I'd note that this is turning down what looks like a Pareto improvement on the surface out of sheer spite, but 'people are spiteful dicks' is an assumption in this model).<br /><br />In that case the question of whether it's better to focus on increasing absolute wealth at the expense of inequality depends entirely on how high wealth is to start with.<br /><br />That said, I think it's a somewhat dubious proposition that we've reached a point where spite is the driving force of our enjoyment in life. By contrast your point 1 would have much the same effect (the size of the effect doesn't depend on current wealth levels, only on relative wealth) on much firmer grounds.<br /><br />...so I just talked myself out of the devil's advocate position I was taking in the first place. Well enough then.Anonymousnoreply@blogger.com