Anyone who doesn’t have their head burried in the sand realizes it – our nation is plagued by extreme economic inequality. However, every time there is an effort to do anything to solve this problem, and often even when there is a drive to formally acknowledge this for the problem that it is in the first place, there are always those who complain that without this inequality, people would have no incentive to put in a hard day’s work, or to invest time or energy into anything fruitful. This, of course, is a ludicrous claim. Of course, it is true that absolute and unconditional economic equality will leave people with much diminished incentive to contribute to society, and conditional economic equality is bound to fall short of being universal and complete. However, to claim that doing anything about the extreme economic inequality that we face will result in that stifling apocalypse of equality is a down-right invocation of the False Dilemma fallacy.
Those who contribute more than others ought to be rewarded economically – and allowing that will invariable make complete economic equality impossible. However, the amount of inequality that we have well exceeds the economic inequality that is inevitable if productivity is to be economically rewarded. One might even argue that the perverse level of inequality that we have even goes so far as to actually hinder this incentive to produce by enabling a class of people who make their living by using pre-existing wealth to leverage the markets in their favor, often doing so at the expense of those who actually do the producing.
The problem is – whenever we say something like “we need economic inequality, but not this much economic inequality”, that makes it important to find a measure by which to quantify equality and/or inequality. The good news is – there is a way to do that, a way to provide a number that measures the equality of distribution of any commodity that can be distributed among members of a group – whether it be the distribution of pennies among different stacks of penies on a table – or whether it be the distribution of income or wealth among people in a society – or anything else, for that matter.
I call this measure the Distribution Equality Index – and this piece is about how to calculate that.
Calculating the Distribution Equality Index
The first step in figuring the Distribution Equality Index is to sort all individuals in the group from the one with the least of the commodity in question to those with the most. If there are members of the group who have none of the commodity in question at all (which makes no sense if you’re figuring the distribution of pennies among stacks of penies – but which makes very much sense if you are figuring the distribution of wealth or income among human beings) they will be at the beginning of the list, because those who have none at all have less than anyone else – unless it is possible to have a negative amount of the commodity in question.In step two, you divide the members into two subgroups – subgroup A and group B. The first rule to follow is that nobody in subgroup A has more of the commodity in question than anybody in subgroup B. That is to say – the most endowed member of subgroup A has an equal or lesser amount of the commodity than the least-endowed member of subgroup B. The second rule is that the total amount of the commodity in question is equal in both subgroups.
Then, in step three, you find out how many members of the group are in each subgroup. The total number of members who are in subgroup A are labeled as “subdistribution A” – and the total number of members who are in subgroup B are labeled as “subdistribution B”. In short – subdistribution A is the number of members who share the 50% less-concentrated amount of the commodity in question – while subdistribution B is the number of members who share the 50% more-concentrated amount of the commodity in question.
Finrally comes step four – where you divide subdistribution B by subdistribution A – and that’s your end result. You can multiply it by a hundred if you want to express your result as a percentage – but that’s it.
One Possible Complication – with a Simple Fix
Now – one obstacle you could potentially run into in step #2 – it could be that if you are to follow rule #1 (that no member in subgroup A has more than anybody in subgroup B) it may be impossible to completely follow rule #2 – as there will almost always be one member on the cusp who will result in whichever subgroup that member is placed in having in total more of the commodity in question than the other subgroup.For small groups, this can be solved by dividing that member up between the groups with the presumption that within an individual member, the commidity is distributed evenly. That is – subgroup A gets the same percentage of that member as it gets of that member’s share of the commodity – and the same goes for subgroup B.
However, with large groups, this calculation can be dispensed with, as it will make little difference which subgroup that member is included in. In those cases, simply follow rule #1 strictly, and follow rule #2 as closely as rule #1 allows.
Implications of the Distribution Equality Index
Anyway – having gone through all this process, it is possible to figure the Distribution Equality Index of any commodity that you can get the necessary information on – including the distribution of wealth or income among members of a society. This way you can give a clear percentage figure that expresses how equal or unequal members of a society are economically.Now – obviously, if the Income Distribution Equality Index or Wealth Distribution Equality Index is approaching a hundred percent, you then have legitimate concern to worry that the level of economic equality is so forced as to deprive people of incentive to work harder or to work smarter. Even at eighty percent, that might be a legitimate concern.
However – when said Distribution Equality Index is below one percent – too much economic equality can not be credibly seen as the primary threat to those who produce more being properly rewarded. In those situations, the only credible threat to that reward is the fact that in such an environment, having money to invest to begin with is a greater determinant of income than actual sweat of the brow.
