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Who cares more about inequality of income - the US or Norway?

Jonny Clark

12th January 2017

Any student keeping abreast of economic news this week would see that inequality of income has cropped up quite often. President Obama said it was an issue for the US during his farewell speech, BoE Governor Carney has said that income inequality could be more of a problem than Brexit, the WEF has said that rising inequality is now a global problem and the ONS have released some figures on income inequality in the UK (great analysis on this topic from my colleague Ruth here).

Interestingly, there is also an article here (from the Guardian), quoting some research on the different attitudes to inequality in Norway compared to the US. Norway has always figured positively on any data set regarding income inequality, such as the OECD's Better Life Index. The USA does relatively well in such studies as well. However, what the research shows is that Norwegian and American people may have a different attitude towards inequality which, of course, could be a driver for the actual difference in the data set.

The research suggests, through a series of experiments, that if Norwegians and Americans had an opportunity to share a work bonus handed out randomly to some workers (whose output was the same as everyone else) approximately 80% of Norwegians would share the bonus equally whilst only 50% of Americans would so the same. The experiment also showed that if the bonus was earned on merit, the Norwegians and Americans were approximately even in their likelihood of sharing the bonus. This suggests that the Norwegian culture retains a sense of meritocracy alongside a desire for income equality.

The evaluative point here for students would be the relative importance of income equality as a macro-economic goal. Is equality more important than low unemployment or stable prices, for instance? The answer to this may be 'depending on' the culture of the society which is being examined.

Jonny Clark

Jon Clark has been teaching economics and business studies for over 25 years primarily in the Further Education sector. Before joining tutor2u, he was a senior manager at South Cheshire College in Crewe.

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