The IFS Deaton Review

We will also think about how we might address concerns about inequality and which concerns need to be addressed. If the concern with inequality is simply envy—as is often claimed by the right—it is perhaps better to address the concern than the inequality. If the inequality comes from incentives that work for a few but benefit many, then we may want to do a better job of documenting the need for incentives and what they do for the economy as a whole. If working people are losing out because corporate governance is set up to favor shareholders over workers, or because the decline in unions has favored capital over labor and is undermining the wages of workers at the expense of shareholders and corporate executives, then we need to change the rules. Why are the myriad differences between men and women so persistent and so difficult to erase?

We want, if we want to know anything about inequality that matters, to look at inequality of consumption, not income. Consumption being determined not by cash income alone, we have to add the consumer surplus to get that. That explosion of free stuff from Big Tech in recent decades hugely, vastly, changing that relationship between GDP and the consumer surplus.