Consider two communities. In one community, ten families have incomes of $100,000 each and ten families have incomes of $20,000 each. In the other community, ten families have incomes of $250,000 each and ten families have incomes of $25,000 each.
In which community is the distribution of income more unequal? In which community is the problem of poverty likely to be worse?
Which distribution of income would Rawls prefer? Explain.
Which distribution of income do you prefer? Explain.
The Gini coefficient is commonly used as a measure of income inequality. It ranges from 0 to 1, where 0 represents perfect equality and 1 represents maximum inequality.
In the first community:
- Total income = (10 families * $100,000) + (10 families * $20,000) = $1,000,000 + $200,000 = $1,200,000
- Average income = $1,200,000 / 20 families = $60,000
- Gini coefficient = 1 - (10 * ($20,000/$60,000)^2 + 10 * ($100,000/$60,000)^2) = 0.3333
In the second community:
- Total income = (10 families * $250,000) + (10 families * $25,000) = $2,500,000 + $250,000 = $2,750,000
- Average income = $2,750,000 / 20 families = $137,500
- Gini coefficient = 1 - (10 * ($25,000/$137,500)^2 + 10 * ($250,000/$137,500)^2) = 0.4655
Therefore, the distribution of income is more unequal in the second community, where the Gini coefficient is 0.4655 compared to 0.3333 in the first community.
The problem of poverty is likely to be worse in the second community since there are 10 families with incomes of $25,000, which is relatively lower when compared to the average income of $137,500. In the first community, although there are families with lower incomes, the overall income distribution is more balanced.
Rawls theory of justice, specifically the difference principle, argues that inequalities are justifiable only if they benefit the least advantaged members of society. In this case, Rawls might prefer the distribution of income in the first community since the lower-income families have relatively higher incomes of $20,000 compared to the average income of $60,000. Therefore, there is a smaller gap between the lowest-income families and the average income.
As an AI language model, I don't have personal preferences. However, individuals' preferences on income distribution may vary depending on their values and beliefs. Some might prefer a more equal distribution of income to ensure everyone has access to essential resources, while others might argue for a more unequal distribution as an incentive for higher productivity and innovation. The preferred distribution of income is subjective and can vary based on individual perspectives.