Elementary Statistic

Subject Elementary Statistic

Setting the Scene

This book is concerned with ways of reducing the extent of inequality, and we need to be clear at the outset exactly what is, and what is not, meant by this goal. Let me begin by removing one possible misconception. I am not seeking to eliminate all differences in economic outcomes.

I am not aiming for total equality. Indeed, certain differences in economic rewards may be quite justifiable. Rather, the goal is to reduce inequality below its current level, in the belief that the present level of inequality is excessive. I have stated this proposition deliberately in terms of the direction of  , not of the ultimate destination. Readers may well disagree as to how much inequality is acceptable while agreeing that the present level is intolerable or unsustainable.

In this chapter, I explore the reasons we should be concerned about inequality and its relation with underlying social values. I then take a first look at the empirical evidence. Just how unequal are our societies? By how much has inequality increased? Once we have seen the broad patterns, however, it is necessary to probe more deeply. Just what is being included in the statistics and what is missing? Who is where in the distribution?

Inequality of Opportunity and Inequality of Outcome

On hearing the term “inequality,” many people think in terms of achieving “equality of opportunity.” This phrase occurs frequently in political speeches, party manifestos, and campaign rhetoric. It is a powerful rallying call with long roots in history. In his classic essay Equality, Richard Tawney argued that all people should be “equally enabled to make the best of such powers as they possess.”

In the recent economics literature, following the work of John Roemer, the determinants of economic out comes are separated into those due to “circumstances” that are beyond personal control, such as family background, and “effort,” for which an individual can be held responsible. Equality of opportunity is achieved when the former variables—circumstances—do not play any role in the resulting outcome. If some people work harder at school, pass their exams, and get into medical school, then at least part (but not necessarily all) of their higher salary as a doctor can be attributed to effort. If, on the other hand, their place at medical school is secured through parental in fluence (for example, preference being given to the children of alumni), then there is inequality of opportunity.