Answer the question
First, I will let the British public give their answers. Wells measured in surveys of people’s perceptions tend to be either “someone who is significantly more wealthy than me” or “elites of London’s metropolitan cities.”
More specifically, HSBC discovered earlier this year in a survey that it believes you will need £213,000 in order to be considered wealthy, even if you earn more than £100,000. When I asked people with six figure salaries if they were wealthy, only one in ten agreed.
One core function of government is to redistribute money from the wealthy to the lesser-rich, so of course, the national perception of income and wealth is rather useless.
Economic analysis can be useful in several ways. First, it can bring some reality into discussion with tools that allow people to see where people fit into the distribution of national income. I think many readers will be surprised at how much they are rising in this institute for the Finance Institute. (As a nerd I already knew my very high position).
But economists are also worried about suspecting that they will focus on this income. Consider a student who is spending from accumulated wealth but has very little income or zero income but has substantial opportunities. A simple focus on income misses the ability of people to borrow, save and spend savings in order to smooth out their standard of living. Perhaps looking at people’s spending is a better measure of sustainable living standards than income.
In a recent underreported study, IFS (again) used a formal survey of household expenditures in a rather novel statistical approach to examine household expenditure levels across the country. This provided a handle on local inequality in living standards.
The result will turn everything you thought you knew about the UK into that head. People living in London may have the highest income, but after omitting exorbitant housing costs, they have almost a low level of spending and therefore a standard of living. This low-consumption pattern of high income is often particularly prominent in local governments such as Islington and Camden, the butts of champagne socialist jokes.
If the government wants to redistribute according to the standard of living measured at the spending level, it will need to take money from Home County and spend more in the northeastern England and inside London.
As this suggests, the question of who is wealthy is difficult, and redistribution of resources is even more difficult. Therefore, it must be supported by democratic legitimacy.
But the message falls on a dead stone in some UK’s regulatory state. In one of the more extraordinary stories of the week, OFGEM CEO Jonathan Blairley said Tuesday that energy regulators are considering enforcing more wealthy households to pay more for electricity.
He expressed this in terms of “whether costs can be allocated more slowly,” and his only Qualm for such actions was related to the logistical challenges of linking electricity charges that regulators don’t know about to household income.
Let’s put this into the regulator very simply. Defining a standard of living is difficult and controversial. Redistribution is still difficult. Therefore, it should only be seated with the elected politician. Avoid that.
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I’ve seen the negative influence of the Netflix series. It’s the dark side of KidFluencing documenting the physical, emotional and sexual abuse of child influencers on social media. I rarely see more dystopians on TV. But it’s worth your time.
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