Summary
Summary EC2A3 Revision Notes
- Module
- EC2A3
- Institution
- London School Of Economics (LSE)
Summary of 31 pages for the course EC2A3 at LSE (Revision notes)
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, WEEK 4-
Income Distribution- endowment , talent, effort, market prices
market
-
systemt> equity /because soldd (
multiperson household labour , use of capital , natural
-
, resources , tech,
time vs
space ,
ownership of property...
Gini
-
coefficient
~move eatt
I
A +B
Share of
equality line
income -
A
S
B
-
-
I
share of pop
rank
n -
G = Zim -
↓ d & deviation from mean.
are
#indiv income
can rank
-
cross-country but
challenging (time , source of income e. )
-
mult
exploitgains from trade and
give people freedom
&
=> ineq arise
VS
nK+ are
inherently unequal because they accentrate
underlying inequalities
to
gain freedom ; personal
agency outside control
process-based
-
us outcome base
- Just
, is
income
-
a
good proxy for utility ? Cardinal
B
V =
Ama
+
marginal utility of income (x+) AmdtB + 0
+ B 2
SOC (x+ B 1) (4+ B) Ama
-
-
tel-re? Mr
Depends on +B diminishing of income
=
I constant
71
increasing
if
diminishing :
=> Utilitarian prefer equality
utilitarian world
equalise income across people
Va + VB is
higher when income dist more equal
e Aalot income B
g.
.
no income
,
A consume lot of
a
goods , nu low
B
high Mr
takeAs wealth
give B =
NMU A bit & MV a lot
↳ Stop when
MV equal
if MV
increasing , app
constant , would not care
, Inequality social welfare transferring utility
-
aversion- think from richer
a by
to
poorer while preserving ranking + keep total V constant
Utilitarianism
I Rawisian
III X infinite It
X = [ (Mill*
no ia
w
VA $30 :
pre for equality
undermine
·
democracy ifequal wealth dist
v-
inequality
rewarding effort
innovation
-
-
risky e reward
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