[CasX]

Found an interesting thing the other day called the 'Utility Theory':

"The greater a person's income, the smaller is the marginal benefit of a dollar. the millionth dollar spent by a rich person brings a smaller marginal benefit to that person than the marginal benefit of the thousandth dollar spent by a poorer person. So by transferring a dollar from the millionaire to the poorer person, more is gained than is lost and the two people added together are better off."

[Siberian Fox]

Care to say where you found it?

That is sort of the basis for an essay I am writing at the moment "Does capitalism maximise societies social welfare".

However, the situation you mention may not actually be desireable, since for the same reasons you mention wealthy people are more inclined to save - necessary for investment. If all income was redistributed there would be very little investment and society would be worse off in the long run.

Also (just a pointless sidenote) the theory you mention is the reason why the income part of the UN's Human Development Index is logged.

[TUC]

We learned about that in the seminar today....buy you dont care to come to those :-D

http://firstclass.uwe.ac.uk

You will have to log in.

[CasX]

Care to say where you found it?

Someone in Economics class mentioned it.

[Proctor]

I don't understand, could you explain it a bit more? And I'm curious now; who mentioned it? The people who take Economics at our school tend to be a bit, *searches for word*, disinterested.

[CasX]

Y'know I can't actually remember who mentioned it now
That's all I know about it too.

[ahab]

I can dig out my econ books... but NAH, i'll try quick and dirty:

so you've got two people, one with $100 and one with $10

the person with $100 gives $1 to the person with $10

the person that had $100 lost 1/100th, the person with $10 gained 1/10th

so now we've got people with 99/100 and 11/10 of the original, 11/10 is another way of writing 110/100

we want to find the total wealth of the two people, so we add the ratio of their new wealth:

99/100 + 110/100 = 209/200 (or 108.5/100)

that's what we've got after the exchange, before the exchange it is 100/100

this is what I remember from econ class last fall, I haven't slept in 23 hours so be nice if i am not correct, I will look this up tomorrow when I have my econ books handy