The Income Gini of Fairness

• Main Author: Ophir Flomenbom
• Format: Article
• Language: English
• Published: World Scientific Publishing 2017-03-01
• Series: Reports in Advances of Physical Sciences
• Subjects: Fairness; Gini; income distribution; wealth distribution; 1% biased economics; crony economics
• Online Access: http://www.worldscientific.com/doi/pdf/10.1142/S2424942417400047
• ISSN: 2424-9424; 2529-752X

We are in favor of wealth accumulation in a free and democratic nation. Yet, the question is whether the mechanism of wealth accumulation is the same to all the people or are there different mechanisms to different socioeconomic-groups, therefore unfair biases in the nation. Here, we would like to develop ways to quantify and fight there unfair distortions. Utilizing methods from socioecono-physics, we find that in a democratic and a free nation, a fair society is such that the income distribution’s Gini is in the range, 25% and 33%, 34%. (Gini is the departure of the distribution from the “all are equal” distribution). The value, Gini ≈40%, is indeed the transition from the intermediate stage nation to the corrupt nation, where Gini ≤ 40% requires that the income distribution is smooth in the top percentiles (rather than a jump like formed). Therefore, the effect of the 0.1% excessive wealth is pivotal to the problem; such nations have Gini values beyond 40%. The wealth distribution’s properties further strengthen these findings. We develop a dynamical model that is emphasizing the difference in the environment of the two camps: the top and the rest, yet find that interactions create a smoother income density. We therefore think that the income distribution’s Gini ≈40% is the alarm stage, yet the Gini should better follow the middle range of the fair society stage (25% through 33%) rather than the upper bound in that stage, where ways to realize that are elaborated on.