Saturday 20 March 2010

Is income arithmetric or geometric?

Further thoughts inspired by that video posted yesterday...

The more slick the presentation, the more careful you have to be to check what's really behind it.

One thing that's bothering me, is that log scale for income. Note that the presenter did mention it, he wasn't trying to hide it, but he seemed very relaxed about it, and it needs thinking about. What it is saying, is that the differences in income are huge. This really does need thinking about, and Vedral makes reference to the geometric rather than arithmetric way that income distribution works in his book "decoding reality" which I'm reading at the moment. You can see how this might come about, your life is improved by percentage increases in income, not absolute amounts. If you earn £500k, a raise of £5k is not going to change your life, but if you are on the minimum wage, it will make a significant difference.

And yet, £5k buys you the same things (I'm talking about within the UK) whatever your income.

I think what this is saying, is that big income differences are really bad!

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