Inequality Possibility Frontier
Description
Daniel Hoyer:
" the Inequality Possibility Frontier (IPF), a measure designed by economic historians Branko Milanovic, Peter Lindert, and Jeffrey Williamson (Milanovic, Lindert, and Williamson 2011) to calculate the maximum possible distributional inequality given different levels of overall productivity. Scheidel highlights the limits in measures like the Gini coefficient with a maximum of perfect inequality that could never actually be reached in practice. The IPF recognizes that there is a minimum amount of total production in a society that must go to sustain the lives of the people living within it—the subsistence level. In practice, it is only a society's surplus wealth (its production beyond the subsistence level) that can be equitably or unequally distributed—an acknowledgement of realistic wealth distribution missing from Gini coefficients and most standard measures of inequality. Although Scheidel had used Gini coefficients and estimates of top share of total income or wealth as his primary measures of inequality throughout the book, he sprinkled in hints in the earlier chapters that there was a limit to the actual maximum inequality achievable at different historical epochs (this observation feeds his notable conclusion that "early societies [vis preindustrial agrarian societies] tended to be about as unequal as they could possibly be (448)”). The IPF, then, offers a somewhat different and more realistic index of inequality, though Scheidel spends most of the Appendix noting that this 'subsistence minimum' can be calculated in different ways (actual physiological subsistence, the minimum 'accepted' culturally or socially, and the minimum required to feed into a large, complex, modern manufacturing, trade, and service based economy). More importantly, the overriding conclusion from this discussion of the IPF is that any way inequality is measured and approached, the arguments throughout the book hold water."