Inequality, Spending, and GDP

In this article in the New Republic, economists Alan Auerbach and Lawrence Kotlikoff give empirical evidence that the rich spend less in proportion to their wealth than the less well off.

Although, their article is about how inequality is not as bad as we think if we compare how much people spend rather than their wealth, their conclusion implies that if we made wealth more equal overall spending would go up since the rich are not spending to their full potential. In fact, only in the highest quintile does wealth exceed spending. Thus, the spending of the lower four quintiles is wealth limited and thus would increase if they had more wealth. Now, Rick Gerkin would argue that GDP growth would not increase or may even slow if wealth were redistributed because savings and investment would decrease but that is a separate issue. The bottom line is that there would be an immediate GDP boost if wealth were made equal.