Showing papers by "Kenneth J. Arrow published in 1987"

Reflections on the Essays

Abstract: That my work has helped to motivate such a considerable number of excellent studies, queries, and even criticisms is a source of considerable satisfaction. A full set of comments would occupy more space than would be appropriate to the occasion. I will confine myself to scattered thoughts stimulated by reading the chapters that deal with impersonal scholarly issues. The reader of the chapters that deal with me more personally should I think be spared the refraction imposed by any comments I might make. I follow the grouping of chapters in the book.

The Demand for Information and the Distribution of Income.

Abstract: : The income of an individual is the sum of income derived from the sale of labor and income derived from the return on wealth. The increment of wealth in any period is the excess of total income over consumption. Therefore, the inequality of income among the members of a population depends at a moment of time on the inequality in labor income, the inequality in property income, and the covariance between them. However, the inequality in the holdings of wealth is to some extent derived from the inequality in past labor income. This paper takes the inequality in labor income as a fact. However, it is well known that the inequality in property income is considerably greater proportionately. It would be natural to assume that saving (excess of income over consumption) is proportional to income. In that case, if it is assumed that labor income comes first, the inequality in wealth should be equal to the inequality in income. Wealth and income are closely related, in that those with high incomes tend to be those with large accomulations of property. But the relation is far from linear. It is well known that the proportion of wealth held by the high income recipients is much higher proportion of income that they receive.