Alladi Ramakrishnan Hall

How Much Inequality is Fair ? Surprising insights from Game Theory and Statistical Mechanics

Venkat Venkatsubramanian

Department of Chemical Engineering, Columbia University, New York, USA

Extreme economic inequality is widely seen as a serious threat to the future of stable and vibrant capitalist democracies. In 2015, the World Economic Forum in Davos identified deepening income inequality as the number one challenge of our time. Yet some inequality is inevitable, even desirable and necessary for capitalist societies to work productively. As different people have different skills, and different capacities for work, they make different contributions in a society, some more, others less. Therefore, it is only fair that those who contribute more earn more.

But how much more? In other words, at the risk of sounding oxymoronic, what is the fairest inequality of income? This critical question is at the heart of the inequality debate. The debate is not so much about inequality per se as it is about fairness.