Nobel Prize and Equality/Equity issues

This year`s Nobel prize for Economics was awarded to Angus Deaton, whose most recent work was entitled “The Great Escape: Health, Wealth and the Origins of Inequality”. Thus, like several other contemporary economists, such as Thomas Pikkety, Angus Deaton is concerned about the growth of inequality both within countries and globally. He considers that improvements in health care are vital to remove one of the root causes of inequality. This could be seen as another external benefit of health care.

Another economist who is very concerned about poverty and its effects is Professor Jeffrey Sachs, who is the Director of the Earth Institute at Columbia University and a Professor of Sustainable Development. He was in Tokyo last week, giving a lecture at the United Nations University. He made the interesting comment that for a very rich person the marginal utility of income may not merely be diminishing (as we have studied) but may also be negative.

I will quote from a reply he sent in answer to a question from a student. ” What then does the extra money bring?  It may bring more power, perhaps.It generally brings attention and notoriety.  It brings many courtiers and people seeking assistance.  It generally leads to a loss of privacy. It may lead to a competitive situation where the super-rich individual is
expected to climb further up the rankings of the super rich.  We do know that many super-rich people end up as alcoholics, drug addicts, divorced, scandal-ridden, isolated, eccentric, or socially burdened in some other way.

All of this is why I said that imploring the super-rich to use their money philanthropically, and imploring society to tax the super-rich adequately, are both correct and socially useful approaches in my view.”

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