Around the World Activity

Chapter 15 Poverty and Income Distribution—Around the World

Read the following articles and pages in order to answer the below questions.

"Bad and Good Inequality", The Becker-Posner Blog
"Does income inequality increase mortality?", Greg Mankiw's Blog
"Paranoia of the Plutocrats", The New York Times

Question

1. In the opinion piece “Paranoia of the Plutocrats,” what does Paul Krugman suggest is a consequence of income inequality?

Income inequality creates an incentive for people to work harder.

Income inequality leads to worse health outcomes and higher mortality.

Income inequality seems to lead to more crime.

Income inequality actually fosters a more fair and democratic community.

Question

2. In his blog post “Does Income Inequality Increase Mortality?” what does Greg Mankiw believe the evidence from Angus Deaton tells us about the relationship between inequality and mortality?

Income inequality seems to cause higher mortality in a given population.

Income inequality is correlated with higher mortality in a given population, but this correlation is driven by differences in race.

Income inequality is not correlated with higher mortality in a given population.

Income inequality seems to cause lower mortality in a given population.

Question

3. In the blog post “Bad and Good Inequality” by Gary Becker, which statement BEST summarizes the difference between what he terms “good inequality” and “bad inequality”?

Good inequality is inequality that promotes productivity and efficiency; bad inequality is the inequality that does not promote productivity and efficiency.

Good inequality is inequality that results from the rising absolute incomes of both the rich and poor; bad inequality is the inequality that results from the decrease in absolute incomes of the rich and poor.

Good inequality is inequality that results from the rising standards of living of both the rich and poor; bad inequality is the inequality that results from the decrease in standards of living of both the rich and poor.

Good inequality is inequality that results from the rising relative incomes of both the rich and poor; bad inequality is the inequality that results from the decrease in relative incomes of the rich and poor.

Question

4. What does Gary Becker say is the cause of the controversy over income inequality?

Some types of inequality are hard to classify as “good” or “bad” inequality.

Everyone agrees that income inequality is bad, but policymakers are unsure of how to address it.

There are groups who say that income inequality is good, and those who say it is bad.

There is disagreement about the severity of the consequences of inequality.

Question

5. What are two avenues by which income and wealth inequality may be reduced?

reduced incomes for the rich and increased incomes for the poor

taxation of the both the rich and poor

tax cuts for both the rich and poor

reduced incomes and work incentives for both the rich and poor