Monday, October 31, 2011

Wilkinson on Inequality

Richard Wilkinson gives a nice short talk for TED on his work with Kate Pickett: The Spirit Level: Why Greater Equality Makes Societies Stronger.  His thesis is intriguing if not always convincing.  He shows a number of strikingly strong correlations between measures of social well-being and inequality, arguing that inequality causes conflict and stress.  For a number of his measures, the simple causal story seems pretty uncompelling: there is a chicken & egg problem with any argument that explains high-school dropout rates using income inequality.  Nevertheless, I was struck by the number of social phenomenon that seem to be consistently related, even if the causal story is confusing.

Friday, October 7, 2011

Pine Nut Conundrum

This article in the New York Times tells the story of the "pine nut truce," in which afghan fighters unilaterally declared a cease-fire for a few weeks to allow local people to safely harvest pine cones from the forests.  As a pine-nut consumer, should I purchase more pine-nuts, to encourage more cease-fires?  Or should I purchase fewer, knowing that this crop is likely funding those fighters who are shooting at our troops?  Given that I really like pine-nuts, I think I should eat more.

Wednesday, October 5, 2011

How progressive is the U.S. federal tax code?

Greg Mankiw posted this link a few weeks ago, in the middle of the discussion started again by Warren Buffett, which shows how progressive the U.S. federal tax code is, and the breakdown into different tax categories.  The numbers the Urban Institute/Brookings Tax Policy Center.  They don't make explicit all of the necessary tax incidence assumptions behind these numbers, but there is enough consensus on those that it is probably not a source of controversy.

There are a number of tax misconceptions that we could correct with these numbers.  One is that the super rich pay less in taxes than the middle class or moderately wealthy.  On average, this is not true, even if we look only at the income tax.  The regressive nature of the payroll tax is also made explicit here, which is interesting, and the incidence and small magnitude of the estate tax is also worth noting.