Rising economic inequality in many countries, especially the rich ones, in recent decades has emerged as an important topic of political debate and a major public policy concern. Widening economic disparities and related anxieties are stoking social discontent and are a major driver of the increased skepticism about public institutions, political polarization, and populist nationalism that are so evident today. Visions of Inequality, a new book by Branko Milanovic, a leading scholar of inequality, places today’s concerns and debate in context. It is an absorbing account of how thinking about inequality has evolved.

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Measurement of income inequality is like measurement of any natural or social phenomenon. We measure inequality as we measure temperature or height of people. The English (or welfarist) school believes that the measure of income inequality is only a proxy for a measure of a more fundamental phenomenon: inequality in welfare. The ultimate variable, according to them, that we want  to estimate is welfare (or even happiness) and how it is distributed. Income provides only an empirically feasible short-cut to it.

I would have been sympathetic to that approach if I knew how individual utility can be measured.

Read the article of Branko Milanovic