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2020 | OriginalPaper | Buchkapitel

12. Just Deserts Outcomes and Aggregate Analysis

verfasst von : Joseph de la Torre Dwyer

Erschienen in: Chance, Merit, and Economic Inequality

Verlag: Springer International Publishing

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Abstract

This chapter compares the Original pre-tax distribution of lifetime “value contributed” to the distribution thereof under four Just Deserts policy variations. The chapter presents the basic descriptive findings of these distributions, while also describing the distribution of chance, the desert-basis, and tax rates. These five distributions are then compared in terms of inequality, income shares, desert, economic mobility, and poverty. Lastly I discuss the consequences of an imperfect Just Deserts distribution.

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Vorheriges Kapitel Just Deserts

Nächstes Kapitel The Just Deserts Economy

The age-restriction of Model #2, on the other hand, ensures that economic mobility itself is restricted by one factor: age.

Marrero and Rodríguez (2013).

Kagan (2012).

Their reason is that such estimates are “highly uncertain.” CBO—Congressional Budget Office (2015).

The Panel Study of Income Dynamics conducted annual surveys from 1968. From 1999 to the present, surveys have been biannual. Thus, as a simple imputation, I use the mean of the two neighbor surveys as data for the missing even years, 1998–2016. Furthermore, since 1968, the Panel Study of Income Dynamics (PSID) has consistently measured the prior year’s labor income of both the “family head” and the “family wife,” if any. Thus 2017 survey data refer to 2016 labor income. The possibility that some included, and excluded, individuals have unmeasured labor income from years prior to family headship, or due to itinerant or temporary family headship, is a limitation of the dataset I cannot overcome. Noting once again the agnostic nature of the Just Deserts proposal, I use this specific model and its parameter estimates for illustrative purposes of how much unmerited inequality may be observed even when using an extremely conservative restriction on information inclusion. All data stem from values using the PSID 2017 longitudinal weights for individuals ages 16 and older to present a nationally representative analysis of individual labor income between 1967–2016.

Note, however, that by utilizing the Just Deserts theory, Sweden and Norway have longitudinal administrative datasets easily available to researchers that would far surpass what I have done for the United States using a survey. Cf. Aaberge et al. (2011); Björklund et al. (2011).

Standard deviations are valid for normal distributions rather than the lognormal distributions seen in the chart. The standard deviations of the normal distribution of lifetime log labor income are ln(Original): 2.13 and ln(JD): 1.68 on two different means (ln(Original): 12.98, ln(JD): 13.34) (recall that exponentiated lognormal distributions with shared medians share a mean when log transformed while our exponentiated distributions share a mean, not a median).

Card and DiNardo (2002).

“The ratio between the ninetieth percentile of the income distribution and the tenth percentile.” Piketty (2014), 267.

These numbers, “Original,” are not strictly comparable to the Just Deserts models due to different tax units (personal income tax rates from household quintiles vs. individual quintiles) and definition of income (before-tax income vs. labor income) but are for illustrative purposes only. CBO—Congressional Budget Office (2013), 9. “Before-tax income is the sum of market income and government transfers. Market income is composed of labor income, business income, capital gains, capital income (excluding capital gains), income received in retirement for past services, and other sources of income. Government transfers are cash payments and in-kind benefits from social insurance and other government assistance programs.”

Although previously published in less elegant form by Kolm and later developed by Kakwani and Shorrocks.

Lambert (2001), 2.31. Also note that our mean labor incomes are the same under all distributions and so the Lorenz curve and Shorrock’s generalized Lorenz curve are equivalent. Lambert (2001), chap. 3.

We do not expect the ethical observer, a socially concerned and personally disinterested individual, to have a convex utility-of-income function, that is, prefer more inequality to less for the sake of inequality alone, although this is, strictly speaking, a logical possibility that the Just Deserts proposal would also fail to satisfy.

With negative distributions, these individuals did not receive sufficient lifetime labor income to pay their current Just Deserts liabilities. While these individuals may not pay with compensation they did not earn, assets may be used for payment.

The Ricci-Schutz coefficient (or Pietra’s measure) is less popular but easier to interpret than the Gini coefficient, as it is equivalent to the percent of population compensation that would need to be transferred from above the mean to below the mean in order to reach perfect equality. The original Ricci-Schutz coefficient for the unweighted sample is 0.479 and has been reduced, respectively, to 0.370, 0.425, 0.229, and 0.442 (JD.LE, JD.AR, JD.LS.E, and JD.LS.E.MR.BV, respectively). Proper weights will change this, but not much, so it is only suggestive at this point.

Atkinson (2015).

Peragine defines the difference in pre- and post-implementation Gini coefficients as the “opportunity redistribution” statistic. Peragine (1998).

Pistolesi (2007).

Piketty (2014), 246–270.

The following discussion may be seen as a step toward answering Ferreira and Peragine’s call for robust measures. Ferreira and Peragine (2015), 31.

For alternative constructions of Lorenz curves for “equal opportunity” or “fairness,” cf. Peragine (1998); Almås et al. (2011); For alternative constructions of Lorenz curves for “equal opportunity” and “fairness,” cf. Lefranc et al. (2009).

Note that this looks like a formalization of a measure of the satisfaction of Kagan’s “bell motion” as well as Arneson’s argument for “a form of consequentialism that is prioritarian both in the domain of desert and in the domain of well-being and gives extra priority to achieving well-being gains for those who are comparatively more deserving.” Arneson (2007), 264; Kagan (2012).

Ramos and Van de Gaer (2012); Ferreira and Gignoux (2011).

Bowles et al. (2005a), 21–22; Harding et al. (2005), 131–140; Swift (2005).

More technically, they reject the desire to distribute resources such that our estimate of the correlation to be exhibited by the true underlying data generating processes would be statistically indistinguishable from 0.

Swift (2005); This is also a classic conservative objection to egalitarianism according to Anderson, cf. Anderson (1999), 288.

Assortations show wealth correlations of 0.4 that contribute to greater household wealth inequality as well. Charles et al. (2013).

Recall that lump-sum taxes allow one to change the economy without “distorting” the economy.

Segall (2013); Mason (2006).

Parfit (2000); Feldstein (2005), 12.

Tungodden and Vallentyne (2007).

Lambert (2001), 77. We technically need to exclude zero incomes for this to hold, however, given that the generalized Lorenz curve of our multiple Just Deserts’ distributions never falls below that of our original chance plus merit distribution, we can say more strictly that poverty is reduced for all poverty lines above the lowest non-zero income in the population. Thus, all conceivable poverty lines for the United States show less poverty under Just Deserts than we see today. Of course, it must be noted that this poverty measure follows the methodological individualism of the Just Deserts proposal and completely forgoes any analysis of households and excludes all those who are not moral agents.

Sen (2009).

At the very least, I think I can meet Wolff’s criteria: “All that is required is a policy that will approximately achieve the goal. If some errors creep in, that may be inevitable, but as long as the broad shape of resulting distributions reflects the underlying principle or value, that may well be enough.” Wolff (2003), 227.

For a brief review of consequentialism in relation to distributive justice, cf. Adler (2011), 22ff.

Young (1999), 252; Also, cf. Sher (1987), 33; Goldman (1987).

This argument ought to account, in domains beyond Just Deserts, for self-ownership rights that may trump public policy intervention.

This argument does not apply to those such as Nagel arguing in favor of no redistribution.

26 U.S. Code § 63 - Taxable Income Defined. 2000.

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Titel: Just Deserts Outcomes and Aggregate Analysis
verfasst von: Joseph de la Torre Dwyer
Verlag: Springer International Publishing
Buch: Chance, Merit, and Economic Inequality
Print ISBN: 978-3-030-21125-7

Electronic ISBN: 978-3-030-21126-4

Copyright-Jahr: 2020
DOI: https://doi.org/10.1007/978-3-030-21126-4_12