Tags: Shiller | income | inequality | insurance

Shiller: Income Inequality 'a Subtle Problem'

By    |   Monday, 26 January 2015 11:30 AM

Nobel laureate economist Robert Shiller of Yale University seems to have a novel approach to the issue of growing income inequality.

"It's a subtle problem," he said last week at the World Economic Forum in Davos Switzerland, Bloomberg Businessweek reports. He proposes "financial engineering" as a solution to at least lessen the problem. That solution includes "livelihood insurance."

"With livelihood insurance, a private insurer would pay a stream of income to a policyholder if an index of average income in the insured person’s occupation and region declines substantially," Shiller writes in an article for Project Syndicate.

"Moreover, this income stream would continue for as long as the index stays down, not just for a couple of years."

Shiller's tool kit of financial engineering also includes neighborhood insurance, designed to protect homeowners from a loss in value if their neighborhood goes downhill.

Meanwhile, another Nobel laureate economist, Joseph Stiglitz of Columbia University, disputes the notion that inequality of income is inevitable in a market-based economy.

"The problem of inequality is not so much a matter of technical economics. It’s really a problem of practical politics," Stiglitz writes in The New York Times.

"The American political system is overrun by money. Economic inequality translates into political inequality, and political inequality yields increasing economic inequality," he argues.

"Ensuring that those at the top pay their fair share of taxes — ending the special privileges of speculators, corporations and the rich — is both pragmatic and fair. We are not embracing a politics of envy if we reverse a politics of greed."

But it's not just about increasing taxes on the rich, Stiglitz notes. "[It's] also about our children’s access to food and the right to justice for all. If we spent more on education, health and infrastructure, we would strengthen our economy."

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Nobel laureate economist Robert Shiller of Yale University seems to have a novel approach to the issue of growing income inequality.
Shiller, income, inequality, insurance
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2015-30-26
Monday, 26 January 2015 11:30 AM
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