In exactly one week from now, Australia’s JobKeeper and JobSeeker coronavirus supplement payments will cease to exist, bringing to a close a unique chapter in modern Australian history in which income inequality is likely to have fallen.

That’s not to say both payments shouldn’t end – well, not directly, anyway. Treasurer Josh Frydenberg is right to say that extending the JobKeeper program in particular would impede the free movement of workers into jobs that offer the best prospects. That is to say, in official Treasury lingo, it would impede workers reallocating to jobs where the value of their marginal output would be highest. Say that three times fast.

Economists are big fans of this idea of achieving “Pareto efficiency” in the economy – that is, reaching a situation where society can’t make someone better off without making another person worse off. But the truth is, there are many different potential distributions of both incomes and wealth upon which this worthy pursuit of efficiency could be built.

Economics is mute on which precise level of inequality yields the best outcome for society in terms of maximising total “utility”. It does, however, suggest strongly that a more equal distribution of incomes would produce more happiness. Why? Because of the idea of “diminishing marginal utility”.

Put simply, one dollar does a lot more to boost the happiness of a poor person than it does a rich person. Therefore, taking one dollar from a rich person and giving it to a poorer person boosts society’s total happiness. Robin Hood was on to something.

Of course, you don’t want to go so far as to mess with incentives completely, so that enterprisingly minded people don’t bother taking risks and investing at all for fear their potential gains will be seized.

In reality, we’re dancing somewhere in between, where the potential disincentives created by redistribution should be weighed against the likely gains to the happiness of society from a more equal distribution of incomes.

So how much inequality is optimal? Dunno exactly, is the bottom line. Something a bit more equal than now is the strong contender. Interestingly, surveys suggest COVID-19 has decreased citizens’ appetite for inequality in some countries. According to one recent study of citizens in Italy, Germany and Britain, the pandemic has increased citizens’ aversion to inequality in both incomes and health outcomes.

In Britain, aversion to income inequality increased 8.8 per cent between 2016 and 2020, while aversion to inequality in health outcomes jumped 17.3 per cent. The researchers found the groups most tolerant of higher levels of inequality were high income earners, younger people and risk-loving people. In contrast, more highly educated individuals were found to be most averse to higher inequality.