How do preferences and risk contribute to income inequality?
Some people do not prefer to work and prefer to live off others' income/ charity. This increases income inequality. Some persons prefer to buy artisan, poor women made handicrafts and other goods instead of machine made goods. This helps reduce income inequality. Some industrialist take great risk in trying to expand and some of them fail. Those failed investments lead to lclosure of business and retrenchment of people. This tends to enhance income ineqaulity. These who succedd however emplos more people and give higher wages and therefore help reduce income inequality. When however individual takes risks and become famous singer (INdian Idol route) or New Successful entrepreneur or film star celebrity, this help reduce income inequality. The nations and societies who do not want to take the risk of competing with foreighners in the internationa market, suffer from both low income and high income equality or rather poverty equality. Individuals who take risk and successfully get good jobs abroad, remit money back home to parents and siblings regularly. This reduces income inequality.
But at the end I must confess that we should not seek any one to one clear relationship between preference and income inequality or risk and income ineqality.
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