system
Given the following post, respond as if you're commenting on Reddit:
human
Does wealth inequality lead to decreased allocative efficiency?

If a small group of people own most of the wealth in an economy, wouldn’t that lead to the overproduction of luxury goods at the expense of goods the majority want? If every dollar spent is a vote in what goods and services get produced in an economy, wouldn’t having more dollars give you more votes? So say a country has large wealth inequality and builds thousands of hundred million dollar mansions, wouldn’t that take away resources and labor from producing modest housing and increase home prices and rents?
gpt
Not in the sense you're implying. If a society has greater inequality, there may be greater demand for luxury goods, which will lead to more luxury goods being produced. However, there is nothing inherently *inefficient* about that.

There is some research (though it's a contested subject) that high levels of inequality may harm economic growth, but if it does it's likely through different channels.