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May 15, 2012


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Paolo Siciliani

In a sense this is strongly reminiscent of Rawls’ ‘veil of ingnorance’, behind it there is a positive multiplier and, alas, vice versa. How do people choose which perspective to adopt? As you said, many factors, cultural, social norms, but also past experience. If people are risk averse, changing a system that works may be unpalatable, so I can see why Scandinavians are by and large happy to keep things as they are, whereas elsewhere the short-sighted opportunism from those getting better off might derail a reform process. In this sense there is a sort of critical mass that should be reached before the reforming process is self-sustaining.


This paper is seriously flawed. They examine a model where the tax rate is flat. I seriously doubt their result generalizes to considerations of a progressive tax system.

To illustrate, consider two societies:

A) 51% earn £19K PA and 49% earn £21K
B) 80% earn 10K PA. and 20% earn £60K.

A is more equal than B and they both have approximately the same average income. It is obvious that if people vote according to their material interests (as in the case in the paper mentioned) that there will be a much larger demand in society B for progressive taxation than in society A.

While there may be an equality multiplier the Barth and Moene explanation is certainly not the right explanation.


Lots of woolly thinking here.

As you point out, the multiplier is sign symmetric , ie direction-neutral.

"Why are some countries more equal than others? A new paper by Erling Barth and Karl Ove Moene has an explanation - the equality multiplier"

A multiplier can't explain international variation, can it? I mean, it is supposedly present in all countries, so how can it?

It might explain sensitivity to initial conditions.

Even then there is a huge hole in the logic, since the existence of an effective multiplier would predict ceteris paribus that all countries progress to becoming perfectly equal.

So there must be equality opposing mechanisms that balance the multiplier, even at the extremes. So the multiplier explains nothing.

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