by Sukrit Sabhlok

Created on: December 12, 2006   Last Updated: April 19, 2007

The shortcomings of denouncing inequality are clear from a simple thought experiment.

Assume for a moment that despite being distinct terms, inequality and poverty are strongly correlated. Reducing poverty by increasing the incomes of the most disadvantaged would, in theory, also reduce inequality.

But it might not, as the incomes of the rich (the top quintile) could increase at a faster rate than that of the poor (the bottom quintile).

So inequality would rise, but poverty would fall.

Yet surely reducing poverty is more important than reducing inequality?

A 2004 survey of global inequality in The Economist summed it up nicely: "Critics of capitalism are convinced that the gap between rich and poor is widening across the world. For them, the claim amounts almost to an article of faith: worsening inequality is a sure sign of the moral bankruptcy of the system'. Whether rising inequality should in fact be seen as condemning capitalism in this way is a question worth addressing in its own right."

The debate over whether inequality is increasing seems to cast doubt on the precision with which measures like the Gini coefficient reflect what is really happening.

But my point is different. Is there any reason we should measure inequality, apart from the feel-good benefit that accrues to some people?

Why not simply focus on eradicating absolute (not relative) poverty?

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