When is it considered irrational to classify individuals as rich or poor based on income alone?

Classifying individuals strictly based on income as either rich or poor can be considered irrational due to the concept of causal simplification. This term refers to the tendency to oversimplify complex situations by attributing them to a single cause, which in this context, is income level. While income does play a significant role in determining an individual's economic status, it does not encompass the full spectrum of factors that contribute to one's wealth or lack thereof.

For example, wealth can also be influenced by access to resources, education, social capital, investments, and even life circumstances such as health or opportunity. By reducing economic status to income alone, one overlooks the intricate web of elements that impact a person's financial situation. This oversimplification can lead to misconceptions and inadequate policy responses designed to address economic disparities. Therefore, understanding that income is just one piece of a much larger puzzle helps foster a more nuanced discussion about social and economic classification.