I’m curious to know, if the wealth was redistributed like this, but with no modifications to the underlying system, how long before the existing Pareto-style distribution returns?
If it’s a one time thing, it wouldn’t take very long. Redistribution would have to be a continuous process.
Markets inherently create inequalities. You can also verify this for yourself by playing something like Eco (where all players start with the same wealth) for a like a week and then watching everyone complain about inequality.
It doesn’t take a genius to understand that if given a windfall of nearly half a million dollars, most people would instantly fritter it away on useless nonsense like drugs, alcohol, and luxury goods. Just look at the average outcome for lottery winners: nearly one third of them ends up declaring bankruptcy within five years.
Who said they were planning on it? The real economic implications of that scale of payout are basically unknowable.
Contrary to pithy internet comments, cash windfalls have been shown to unlock the economic potential of that money very efficiently. Replacing food aid with one-time direct cash aid leads to higher quality of life for the poor. They actually do invest it in housing repair, transportation for jobs, necessary clothing, etc…
Yeah some people are just gonna do $400k worth of cocaine, but the myopic view of a stereotype lottery winner is pretty unfounded.
Which is it, is the outcome basically unknowable or almost certainly positive? Can’t be both, can it.
And what makes you think that the results of Bangladeshi or Malawian subsistence farmers facing the potential sale of their cows due to short-term economic shocks would directly translate to, say, homeless people in the US?
It doesn’t take a genius to understand that if given a windfall of nearly half a million dollars, most people would instantly fritter it away on useless nonsense like drugs, alcohol, and luxury goods
You made an over generalized statement that “most people” waste a windfall, which clearly isn’t true with our current evidence. Yeah nothing as outlandish as this hypothetical has ever happened, but I feel more comfortable projecting that ~173 million people getting a wealth bump will look more like those large scale programs than a few dozen lottery winners.
there’s no evidence to even support your lottery bankruptcy stat
Literally the first article you cited makes note of the fact that all of the previously published literature found no evidence that people became significantly happier after winning the lottery (links are provided there so I won’t repeat them here). Unfortunately I cannot read the rest of the article since it’s paywalled.
In the second study, the vast majority of the sample consists of people winning smaller sums (over 80% won less than $200k, which is certainly enough to fix the most pressing issues in your life, like a leaking roof or being behind on rent, but likely not enough to build a foundation for long-term wealth). Also, consider that this happened in an environment where the average person did NOT win the lottery, which is important because a massive shift in wealth distribution could have a significant effect on demand curves and would likely cause a huge change in market prices for nearly every good on the market.
Check the YT videos of people who said the same and voluntarily tried to escape a life at the bottom. It’s a comforting illusion that one could hustle onself back into ‘normal’ life. I have seen two attempts, and both gave up.
I’m curious to know, if the wealth was redistributed like this, but with no modifications to the underlying system, how long before the existing Pareto-style distribution returns?
If it’s a one time thing, it wouldn’t take very long. Redistribution would have to be a continuous process.
Markets inherently create inequalities. You can also verify this for yourself by playing something like Eco (where all players start with the same wealth) for a like a week and then watching everyone complain about inequality.
Like a week.
It doesn’t take a genius to understand that if given a windfall of nearly half a million dollars, most people would instantly fritter it away on useless nonsense like drugs, alcohol, and luxury goods. Just look at the average outcome for lottery winners: nearly one third of them ends up declaring bankruptcy within five years.
I don’t know that lottery winners are a good representative sample. Playing the lottery isn’t exactly sound financial planning.
…but hoping for completely egalitarian wealth distribution someday is?
Who said they were planning on it? The real economic implications of that scale of payout are basically unknowable.
Contrary to pithy internet comments, cash windfalls have been shown to unlock the economic potential of that money very efficiently. Replacing food aid with one-time direct cash aid leads to higher quality of life for the poor. They actually do invest it in housing repair, transportation for jobs, necessary clothing, etc…
Yeah some people are just gonna do $400k worth of cocaine, but the myopic view of a stereotype lottery winner is pretty unfounded.
Which is it, is the outcome basically unknowable or almost certainly positive? Can’t be both, can it.
And what makes you think that the results of Bangladeshi or Malawian subsistence farmers facing the potential sale of their cows due to short-term economic shocks would directly translate to, say, homeless people in the US?
You made an over generalized statement that “most people” waste a windfall, which clearly isn’t true with our current evidence. Yeah nothing as outlandish as this hypothetical has ever happened, but I feel more comfortable projecting that ~173 million people getting a wealth bump will look more like those large scale programs than a few dozen lottery winners.
BTW there’s no evidence to even support your lottery bankruptcy stat. Multiple studies confirm that winning the lottery improves long term quality of life and most people spend their winnings over time with no evidence of extravagant waste.
Literally the first article you cited makes note of the fact that all of the previously published literature found no evidence that people became significantly happier after winning the lottery (links are provided there so I won’t repeat them here). Unfortunately I cannot read the rest of the article since it’s paywalled.
In the second study, the vast majority of the sample consists of people winning smaller sums (over 80% won less than $200k, which is certainly enough to fix the most pressing issues in your life, like a leaking roof or being behind on rent, but likely not enough to build a foundation for long-term wealth). Also, consider that this happened in an environment where the average person did NOT win the lottery, which is important because a massive shift in wealth distribution could have a significant effect on demand curves and would likely cause a huge change in market prices for nearly every good on the market.
This comment has big “The poor can’t be trusted with money” vibes.
We need better financial education. On top of better wages
It’s not surprising that people who don’t have money never have an opportunity to figure out how to handle money properly.
The vast majority of them can’t. Those who can be trusted with it generally don’t stay poor for long.
Check the YT videos of people who said the same and voluntarily tried to escape a life at the bottom. It’s a comforting illusion that one could hustle onself back into ‘normal’ life. I have seen two attempts, and both gave up.
Yeah, because N=2 is definitely a statistically significant sample. Especially when it comes to YouTubers.
It’s enough to show that escaping poverty is not trivial.
Yes, just like two black people moving in is proof that the neighborhood is going to shit.
I don’t have better proof. For me it was enough because I also read the comments and there don’t seem to be many success stories.
🙄
🙄
You will get hate but you are correct.