Exploring Increasing Income Inequality in the United States: A Public Choice Approach

Abstract

In this article, we present some exploratory analysis of a common measure of income inequality in the United States. That measure is the Gini coefficient, and we explore how, and why, it has increased over the 50-year period in the United States from 1967 to 2017. Our hypothesis in doing so is that rising U.S. income inequality is due, at least in part, to growth in efforts by individuals, groups and even large companies in the United States to use government, with its power to compel, to bend the income distribution in their favor—an activity that public choice economists refer to as rent-seeking. When compared with some simple measures that proxy rent-seeking activity, such as the number of licensed lawyers and the number of registered political action committees, our analysis suggests that the U.S. Gini coefficient rises, a move that indicates increasing income inequality, over time with similar cycles in rent-seeking activity.