From Income Inequality to Economic Inequality

I begin by recounting a true story-a rather trivial and innocuous story, as it happens, but one with something of a lesson. Some years ago, when I went to give a lecture at another campus, I chose "Economic Inequality" as the title of my talk. On arrival, I found the campus covered with posters announcing that I was speaking on "Income Inequality." When I grumbled about it slightly, I encountered gentle, but genuine, amazement that I wanted to fuss about such "an insignificant difference." Indeed, the identification of economic inequality with income inequality is fairly standard, and the two are often seen as effectively synonymous in the economic literature. If you tell someone that you are working on economic inequality, it is quite commonly assumed that you are studying income distribution. This implicit identification can be found in the philosophical literature as well. For example, in his interesting and important paper "Equality as a Moral Ideal," Harry Frankfurt (1987), the distinguished philosopher, provides a closely reasoned critique of what he calls economic egalitarianism, defining it as "the doctrine that there should be no inequalities in the distribution of money" (p. 21). The distinction, however, is important. Many of the criticisms of economic egalitarianism as a value or a goal applies much more readily to the narrow concept of income inequality than it does to the broader notions of economic inequality. For example, giving a larger share of income to a person with more needs, say due to a disability, can be seen as militating against the principle of equalizing incomes, but it does not go against the broader precepts of economic equality since the greater need for economic resources due to the disability must be taken into account in judging the requirements of economic equality. Well, the subject of this paper is precisely the difference between economic inequality and income inequality. It will be argued that we ought to pay much more attention than we conventionally do to economic inequality in an appropriately broad sense, taking note of the fact that income inequality, on which economic analysis of inequality so often concentrates, gives