Question

If you knew you would be born into and stay among the highest 10% of earners in a country, which one would you chose and why? Things to keep in mind is income inequality.

Answer 1

Economic disparities are still a function of where you are born, who your parents are and in some cases your gender too. Although, those at top get to enjoy these higher level of income but it is to be noted that very high income inequality can lead to serious disruptions in both economic system and social system (many revolts in the world history are started by those who have stayed at the bottom of pyramid).

Economic dimension:

Being born and staying among the highest earners of the country does provide an advantage in terms of better education, health and other social & economic measures but what matters is not just higher level of income but high growth rate of income. If the incomes get stagnated (at higher level of income also), people see decline in their relative welfare. So the focus should be on higher growth rate of income and not just on higher level of income.

Now, higher economic growth rates can not be achieved if there are huge income disparities. Income inequality inhibit income growth rate of a country in the long run. It is because those at the bottom pull down the overall growth rates. So, it is very important for economic growth to be inclusive so that individuals can enjoy higher standard of living.

Social dimension:

Not every society respects inheritance and encourage people to climb the economic ladder on their own. Many countries put greater importance to values like social & economic equity, justice etc. (There are examples where inheritance and wealth tax are very high). Government plays an active role in redistribution of income in such societies and try to provide maximum opportunities for all. These are more desired societies than just having some rich people at top.

Hence, higher income at the top (because of inheritance or any other factor) is and should not be the only criteria of progress of a country and an individual should take any decision based on other variables too.