Sunday, June 08, 2008

Measuring Inequality

When politicians sprout out statistics on inequality they forget to mention the implicit gains. For example if the price of good does not rise with general inflation then a consumer benefits because they are able to increase their purchasing power.

Here is a blurb from the NYT:

"..but trade with China has already eased hardships for poorer Americans. A new research paper by Christian Broda and John Romalis, both professors at the Graduate School of Business at the University of Chicago, has shown that cheap imports from China have benefited the American poor disproportionately. In fact, for the poor, discounting in stores such as Wal-Mart has offset much of the rise in measured income inequality from 1994 to 2005."

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