Sunday, March 25, 2012

Why are Economists so (Consistently) Led Astray About Inequality?

In a recent Boston Globe article Ed Glaeser, a conservative urban economist at Harvard, wrote an article titled Why income disparity in Boston isn't a bad thing. Glaeser is right that inequality increases in a city such as Boston can be due to selection effects, since poor people are moving into Boston for economic and cultural opportunities. Yet these selection effects (i.e., poor people moving into a geographic area in the hopes of upward mobility, which is generally considered a good thing) is drastically different from the observed outcomes (i.e., large disparities in people's wealth due to their social positions in a system of occupations, which is generally considered a bad thing). Yet Glaeser conflates the two, confusing the reader and, perhaps, himself. A more accurate title for the article would have been "Why poor people moving into Boston isn't a bad thing." This raises a question: why are economists so (consistently) led astray about the causes and consequences of economic, social, and political inequality?