ECON: Rich get richer ?

From: Alexander 'Sasha' Chislenko (sasha1@netcom.com)
Date: Thu Dec 10 1998 - 14:46:28 MST


There are different ways of calculating whether rich
get richer, or poor get poorer. One can look at people
who fit into a certain percentile last year, and see how
they are doing last year (as far as I know, according to
this statistic, last year's top 10% get a bit poorer,
while last year's bottom 10% get a bit richer.
  The usual statistic here though is to look at how well
the top [bottom] N% of the population did last year, and
how the top [bottom] N% of the population do today.
But these are different people! Sure, this still means
that there may be growing differentiation of incomes,
but this is exactly because yesterdays not-the-richest
are becoming richer than the yesterday's richest.
  It is also possible for everybody to be getting richer
all the time, while the society is getting poorer.
Consider wealth function for an individual by calendar year:

Wealth = Const + Age*100 - Year*99

And then, there are different types of occupations and
ways of counting wealth, different percentiles one can
take into account, the fact that the greatest riches of
the civilization - knowledge, arts, music, etc. are becoming
increasingly democratically accessible, etc., etc.

The statistics are usually not trying to illustrate the
meaning of the process, but gain supporters for political
campaigns, with both people running and people voting for
them interested in their own little power games more than
social engineering.

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Alexander Chislenko <http://www.lucifer.com/~sasha/home.html>
<sasha@media.mit.edu> <sasha@lucifer.com> <sasha1@netcom.com>
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