Social cost

Inequality has been recognised as an increasingly pressing problem of our times. Currently, citizens and consumers have little information about how the money they spend is distributed among those involved in the conception, production and sale of the goods and services purchased.  In a op-ed in Le Monde, I suggest empowering them, by providing information on such inequalities at the point of purchase. Armed with this information, citizens can incorporate the related “social costs” into their purchasing decisions.

The theory

This paper sets out the economic case for the promise of the proposal, showing on a simple model that it will reduce income inequality (for populations which display the aversion to inequality typically found in empirical studies) and re-establish social efficiency.

The evidence

Income inequality information will only have an impact if people are willing to pay more for goods associated with less income inequality. But are they? Definitely yes, according to this incentive-compatible choice-based experiment on a representation sample of the English and US populations. A large majority of subjects, across the political spectrum, are willing to pay significant amounts to eliminate large income inequalities.

In practice

A relative simple and legislatively light way of providing such information is via a public, free mobile application. This document draws up a roadmap for the development of such an app.

Questions?

Here is a page of frequently-asked questions about the proposal (and some suggested answers).

Slides and talks

Here is a video of the (virtual) presentation of the theoretical paper mentioned above. Slides for that talk are available here, and more recent slides here.

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For furthermore information, comments or expressions of interest, don't hesitate to drop me an e-mail.