If you are trying to explain the Gini coefficient to students, consider writing a simple simulation with N players and random interactions with a fixed stake and a fair coin. After a reasonable number of rounds, you'll get a power curve. That flows from the structure of the game. It has nothing to do with whom one interacts or a bias in each interaction.
If you introduce a bias to the game, you get a steeper curve with a higher peak. There can be all sorts of bias. The simplest is that in repeated games, the party with the higher initial stake will win which is why gambling houses have a maximum bet. An early winner obtains an advantage that has nothing to do with economic structure or efficiency.
If you are concerned with economic efficiency as some form of optimization, you can't allow wealth or units or credits or whatever to accumulate indefinitely. This also flows from the structure of the problem. It's too easy for a hill climbing algorithm to get stuck far from any maximum which is why things like jubilees, bankruptcy and simulated annealing work.
If you want a political solution as one might in the real world, you have to accept a power curve distribution. If you are concerned with equity, then you have to manage the steepness of the curve. If you are concerned with growth and efficiency, again, you have to reshape the curve by some mechanism or another. In every case, it is a political problem and any solution will have to be political.
I am less concerned about the meaning of the Gini coefficient than the dynamics. Why the inexorable rise in the Gini index since the 1970s in the US (and elsewhere)? Is Piketty's analysis a partial explanation, and if so, should we implement policies to try to hold it in check, if not reduce it? [Note in the UK, even the Labour Party will not tax the rich for the claimed fear that they will leave the country as they did in the 1960s with very high tax rates. Do we need global control of tax rates, or is that a pipe dream? At what Gini index value does society break down, or become very authoritarian? Have we reached it in some countries, and if so, how close are we? Has anyone looked at the wider consequences of different Gini index numbers for a nation? Not just the social situation, but other issues, like damage to the biosphere, and skewing industries away from some sectors to satisfy just the wealthy, etc.
Your description of the Gini Coefficient raised a lot of issues with me.
Several years ago, I found that the state with the lowest ratio under the Gini Coefficient was Utah. So the best way to achieve the liberal ideal of equality would be for everyone to convert to Mormonism.
My father-in-law, a surgeon, said that you should try to explain medical concepts to non-physicians. He said if you can't do this, you probably don't understand the medical concept.
In my adult years, I've never been jealous of those who had a lot more money than me. I've been happy on the income I've made as a law professor. I found that I may wake up depressed, but once I get started on the daily tasks, I feel good. Many people who have a lot of money have a problem finding things to do.
I have known several people who are very rich and have devoted themselves to worthwhile actions. My current hero is the governor of Illinois, J..B Pritzker, who freely admits that he is a billionaire.
If you are trying to explain the Gini coefficient to students, consider writing a simple simulation with N players and random interactions with a fixed stake and a fair coin. After a reasonable number of rounds, you'll get a power curve. That flows from the structure of the game. It has nothing to do with whom one interacts or a bias in each interaction.
If you introduce a bias to the game, you get a steeper curve with a higher peak. There can be all sorts of bias. The simplest is that in repeated games, the party with the higher initial stake will win which is why gambling houses have a maximum bet. An early winner obtains an advantage that has nothing to do with economic structure or efficiency.
If you are concerned with economic efficiency as some form of optimization, you can't allow wealth or units or credits or whatever to accumulate indefinitely. This also flows from the structure of the problem. It's too easy for a hill climbing algorithm to get stuck far from any maximum which is why things like jubilees, bankruptcy and simulated annealing work.
If you want a political solution as one might in the real world, you have to accept a power curve distribution. If you are concerned with equity, then you have to manage the steepness of the curve. If you are concerned with growth and efficiency, again, you have to reshape the curve by some mechanism or another. In every case, it is a political problem and any solution will have to be political.
https://kaleberg.com/public/simplesim.html
That's a link to such a simple simulator.
I am less concerned about the meaning of the Gini coefficient than the dynamics. Why the inexorable rise in the Gini index since the 1970s in the US (and elsewhere)? Is Piketty's analysis a partial explanation, and if so, should we implement policies to try to hold it in check, if not reduce it? [Note in the UK, even the Labour Party will not tax the rich for the claimed fear that they will leave the country as they did in the 1960s with very high tax rates. Do we need global control of tax rates, or is that a pipe dream? At what Gini index value does society break down, or become very authoritarian? Have we reached it in some countries, and if so, how close are we? Has anyone looked at the wider consequences of different Gini index numbers for a nation? Not just the social situation, but other issues, like damage to the biosphere, and skewing industries away from some sectors to satisfy just the wealthy, etc.
Your description of the Gini Coefficient raised a lot of issues with me.
Several years ago, I found that the state with the lowest ratio under the Gini Coefficient was Utah. So the best way to achieve the liberal ideal of equality would be for everyone to convert to Mormonism.
My father-in-law, a surgeon, said that you should try to explain medical concepts to non-physicians. He said if you can't do this, you probably don't understand the medical concept.
In my adult years, I've never been jealous of those who had a lot more money than me. I've been happy on the income I've made as a law professor. I found that I may wake up depressed, but once I get started on the daily tasks, I feel good. Many people who have a lot of money have a problem finding things to do.
I have known several people who are very rich and have devoted themselves to worthwhile actions. My current hero is the governor of Illinois, J..B Pritzker, who freely admits that he is a billionaire.
Allen Kamp