IDEAS home Printed from https://ideas.repec.org/p/lis/lwswps/39.html
   My bibliography  Save this paper

The Extreme Wealth-Income Ratio (EWIR): the Joker Smile Curve (JSC) and the New Age of Extremes

Author

Listed:
  • Louis Chauvel

Abstract

Is it possible to observe explosive economic inequality, even if the Gini indices of income and of wealth remain stagnant? The answer is yes. The Extreme wealth-income ratio (EWIR), that compares the top quantiles of wealth accumulation to the median income level (among other similar variants), expresses the number (thousands) of years the richest fractions of the wealthy can buy of the average layperson’s income. This new indicator brings to light new inequalities that no traditional indicator detects. Building on the traditional wealth-income ratio (WIR, Stiglitz, 1969) and the Top Wealth-Income Ratio (TWIR) recently developed by Chauvel et al. (2021), a new generalization is here proposed to provide a better measurement of the extremization of socioeconomic inequalities based on developments at the top of society. The EWIR is applied to various examples: decades of British, French, and American trends, global data from the last 20 years, and comparisons with data from large-scale surveys (LWS, EU-HFCS, and PSID, among others). The EWIR confirms that the Gini indices of income and wealth are not sufficient measurements for identifying extreme social inequalities.

Suggested Citation

  • Louis Chauvel, 2022. "The Extreme Wealth-Income Ratio (EWIR): the Joker Smile Curve (JSC) and the New Age of Extremes," LWS Working papers 39, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:lwswps:39
    as

    Download full text from publisher

    File URL: http://www.lisdatacenter.org/wps/lwswps/39.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Stiglitz, Joseph E, 1969. "Distribution of Income and Wealth among Individuals," Econometrica, Econometric Society, vol. 37(3), pages 382-397, July.
    2. Jacob S. Hacker & Paul Pierson, 2010. "Winner-Take-All Politics: Public Policy, Political Organization, and the Precipitous Rise of Top Incomes in the United States," Politics & Society, , vol. 38(2), pages 152-204, June.
    3. James B. Davies & Anthony F. Shorrocks, 2018. "Comparing global inequality of income and wealth," WIDER Working Paper Series wp-2018-160, World Institute for Development Economic Research (UNU-WIDER).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Grossmann, Volker, 2008. "Risky human capital investment, income distribution, and macroeconomic dynamics," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 19-42, March.
    2. Canavire-Bacarreza, Gustavo & Martínez-Vázquez, Jorge & Vulovic, Violeta, 2013. "Taxation and Economic Growth in Latin America," IDB Publications (Working Papers) 4583, Inter-American Development Bank.
    3. Shinhye Chang & Rangan Gupta & Stephen M. Miller, 2018. "Causality Between Per Capita Real GDP and Income Inequality in the U.S.: Evidence from a Wavelet Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 269-289, January.
    4. Cristiano Perugini & Gaetano Martino, 2008. "Income Inequality Within European Regions: Determinants And Effects On Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 373-406, September.
    5. Bartels, Charlotte & Jäger, Simon & Obergruber, Natalie, 2020. "Long-Term Effects of Equal Sharing: Evidence from Inheritance Rules for Land," IZA Discussion Papers 13665, Institute of Labor Economics (IZA).
    6. Dalgaard, Carl-Johan & Erickson, Lennart, 2009. "Reasonable Expectations and the First Millennium Development Goal: How Much Can Aid Achieve?," World Development, Elsevier, vol. 37(7), pages 1170-1181, July.
    7. Daniele Checchi & Cecilia García‐Peñalosa, 2010. "Labour Market Institutions and the Personal Distribution of Income in the OECD," Economica, London School of Economics and Political Science, vol. 77(307), pages 413-450, July.
    8. Trzcinski, Eileen & Holst, Elke, 2011. "A Critique and Reframing of Personality in Labour Market Theory: Locus of Control and Labour Market Outcomes," IZA Discussion Papers 6090, Institute of Labor Economics (IZA).
    9. Per Krusell & Anthony Smith & Joachim Hubmer, 2015. "The historical evolution of the wealth distribution: A quantitative-theoretic investigation," 2015 Meeting Papers 1406, Society for Economic Dynamics.
    10. Bourguignon, Francois, 2005. "The Effect of Economic Growth on Social Structures," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 27, pages 1701-1747, Elsevier.
    11. Ricardo Fort, 2007. "Land inequality and economic growth: a dynamic panel data approach," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2‐3), pages 159-165, September.
    12. J.A. Swanson, 1975. "Urban Concentration and Structural Change: The American Middle West, 1850-1930," Urban Studies, Urban Studies Journal Limited, vol. 12(3), pages 309-314, October.
    13. Reeves, Aaron & McKee, Martin & Basu, Sanjay & Stuckler, David, 2014. "The political economy of austerity and healthcare: Cross-national analysis of expenditure changes in 27 European nations 1995–2011," Health Policy, Elsevier, vol. 115(1), pages 1-8.
    14. Jaume Ventura & Francesco Caselli, 2000. "A Representative Consumer Theory of Distribution," American Economic Review, American Economic Association, vol. 90(4), pages 909-926, September.
    15. Theine, Hendrik, 2019. "The media coverage of wealth and inheritance taxation in Germany," Department of Economics Working Paper Series 290, WU Vienna University of Economics and Business.
    16. Rishabh Kumar, 2015. "Wealth accumulation and aggregate demand stagnation in a two class economy with applications to the United States," Working Papers 1526, New School for Social Research, Department of Economics.
    17. Fiaschi, Davide & Marsili, Matteo, 2012. "Distribution of wealth and incomplete markets: Theory and empirical evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 243-267.
    18. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    19. Kumar, Rishabh, 2019. "The evolution of wealth-income ratios in India 1860-2012," SocArXiv sj6h2, Center for Open Science.
    20. Elsässer, Lea & Hense, Svenja & Schäfer, Armin, 2018. "Government of the people, by the elite, for the rich: Unequal responsiveness in an unlikely case," MPIfG Discussion Paper 18/5, Max Planck Institute for the Study of Societies.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lis:lwswps:39. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Piotr Paradowski (email available below). General contact details of provider: https://edirc.repec.org/data/lisprlu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.