In the thread on inequality recently, a poster claimed that relative inequality is unimportant. This is so clearly fraudulent at the national level that it surprises me that anybody honestly believes it to be true. Obviously, relative inequality would matter simply because of diminishing marginal utility. But, in a
paragraph from a recent essay , Chris Bertram summarizes several other reasons why this inequality matters at the domestic level.
"Domestically, it seems to me
that relativities in wealth and income matter because of the way that they can impact upon people’s absolute levels of well-being . There are a number of components to this, and I needn’t rehearse the arguments in grim detail. Amartya Sen goes through some of them in his well-know essay “Poor Relatively Speaking”: if wealthier people come to have access to new technologies, and if access to important goods get mediated through access to those technologies, then the poor who lack such access will find it harder and more expensive to supply their needs. You can run this one from everything from cars and out-of-town shopping centres to the internet. Second there are arguments about how inequalities in wealth and income undermine political equality. Third there are the Frank-style arguments about how relativities impact directly upon happiness. Fourth there are the Marmot and Wilkinson (the other one) arguments about how inequality impacts on health. Fifth, there arguments such as those put forward by Adam Swift concerning how people can translate their advantage in wealth and income into better educational opportunities for their children and place them better in the queue for jobs that those of poorer individuals. Some of these arguments may have flaws (I’m inclined to be more skeptical about the Frank ones than the others) but together they make a compelling case for the idea that inequality is bad for people, domestically"
In the rest of the short essay, he goes on to argue that inequalities between nations are less important because these considerations don't seem to apply (obviously, some people consider them to be unfair, and diminishing marginal utility still applies).