Inequality And Unhappiness

Arthur Brooks has an interesting oped in today's WSJ about the alleged link between inequality and unhappiness.

The general view among liberals is that economic inequality is socially undesirable because it makes people miserable; they propose to solve the problem through redistributive policies such as higher income taxes. As a scholar working in the field of public policy, I have long witnessed egalitarian hand-wringing about the alleged connection between inequality and unhappiness. What first made me doubt this prevailing view was that when I questioned actual human beings about it, few expressed any shock and outrage at the enormous incomes of software moguls and CEOs. They tended rather to hope that their kids might become the next Bill Gates...

The egalitarian argument against inequality starts with the claim that income is all relative: Above a basic subsistence level, they say, we care more about our financial position relative to others than about our absolute income. Experimental studies are often cited that appear to bear this idea out.

In one such study, two-thirds of subjects said that they would be happier at a company where they earned $33,000 while their colleagues earned $30,000 than at one where they earned $35,000 while their colleagues earned $38,000. In another experiment, 56% of participants chose a hypothetical job paying $50,000 per year while everyone else earned $25,000, rather than a job paying $100,000 per year while others made $200,000. Thus, the thinking goes, the very fact that some people have less than others leads to unhappiness, even without deprivation...

There is a fundamental reason to doubt the link between economic inequality and unhappiness. If the egalitarians are right, then average happiness levels should be falling. They aren't.

I have always been more than a little suspicious about what it is one learns from studies in the booming "happiness research" literature. Just more fuel for the fire.

Comments

[skh.pcola]

I've seen that hypothetical posed in more general terms before, such as:

"Would you rather make $100,000/yr while everbody else earns $50,000/yr, or $150,000/yr when everybody else makes $200,000/yr?"

The "everybody else" changes the entire question, since if "everybody else" is making relatively more than you, it is no longer a question of a higher nominal salary...it relates directly to purchasing power.

But even within the same firm, who would be happier making the least money out of "everybody" in the firm? The "Happiness" experiment seems biased towards an egalitarian, nee sociliastic, mindset.

[AgingITGuy]

skh - I agree. It's possible that the people being polled are inferring a different cost of living (& hence purchasing power) in the 2 scenarios.

[skh.pcola]

Roger that, AITGuy. What's more confounding is the exasperation from people who pose such questions when you make an attempt to clarify the conditions. For some people, it is a clear-cut case...for others, the scenario is simply ludicrous on its face (in the absence of more info).

I guess it's worth looking at stuff like this, if for nothing else than to see how different people think differently about the same set of facts (or lack thereof).

[Tony Comstock]

"The general view among liberals is that economic inequality is socially undesirable because it makes people miserable"

Presumes facts not in evidence.

[beergoggles]

Above a basic subsistence level, they say, we care more about our financial position relative to others than about our absolute income.

You sorta figure out what we liberals want and then go and address the wrong argument. The issue for us liberals is all the people living in poverty below the subsistence levels where they cannot afford daily meals, a roof over their head, education for themselves or their children and some way of getting medical treatment for their everyday ailments.

I personally don't care about the salary discrepancy of people living well above the subsistence level. Maybe that makes me a bad liberal, then so be it.

[Ben]

"The general view among liberals is that economic inequality is socially undesirable because it makes people miserable"

start with an incorrect premise and then run from there. i personally think that having an increasing segment of our population living in poverty is a bad idea (a trend which has been accelerating since Reagan took office, with some respite during the Clinton years). i don't need to make sociological arguments about how happy poor people are.

if we are going to talk about goofy happiness research, I lived in Manila for a year. The Philippines is a country where 98% of the population lives in abject poverty and 2% is fabulously wealthy. I, and others, were continually struck by how happy the average Filipino was. Much happier than almost any Americans I know. Despite the fact of their squalid living conditions.

Therefore, is the conservative argument that we should continue to give enormous tax cuts to the wealthiest Americans while continuing not to fund health care for all Americans so that a greater and greater percentage of our population can live in Manila shanty towns and perhaps become as happy as the average Filipino? Based on my anecdotal "happiness research" it seems we should cut the corporate gains tax to 0% and reverse the income tax brackets so that the highest earners pay the lowest percentages (which already happens in practice, by the way).

Yes! Finally a moral justification for Reagan/Bush/Bush Jr. economic policies!

[Ben]

"The general view among liberals is that economic inequality is socially undesirable because it makes people miserable"

start with an incorrect premise and then run from there. i personally think that having an increasing segment of our population living in poverty is a bad idea (a trend which has been accelerating since Reagan took office, with some respite during the Clinton years). i don't need to make sociological arguments about how happy poor people are.

if we are going to talk about goofy happiness research, I lived in Manila for a year. The Philippines is a country where 98% of the population lives in abject poverty and 2% is fabulously wealthy. I, and others, were continually struck by how happy the average Filipino was. Much happier than almost any Americans I know. Despite the fact of their squalid living conditions.

Therefore, is the conservative argument that we should continue to give enormous tax cuts to the wealthiest Americans while continuing not to fund health care for all Americans so that a greater and greater percentage of our population can live in Manila shanty towns and perhaps become as happy as the average Filipino? Based on my anecdotal "happiness research" it seems we should cut the corporate gains tax to 0% and reverse the income tax brackets so that the highest earners pay the lowest percentages (which already happens in practice, by the way).

Yes! Finally a moral justification for Reagan/Bush/Bush Jr. economic policies!

[maxxdogg]

Actually the general view among liberals is that economic inequality is socially undesirable because it creates arrogant dipshits like Arthur Brooks.

[Crof]

The point (some) liberals make is not that inequality makes people unhappy, but that wide gaps in income are associated with higher morbidity rates, greater stress, and shorter life expectancies.

It happens in capitalist countries, but it also happened in the Soviet-bloc countries as the nomenklatura became obviously better-off than the ordinary people. It's happening now in China.

A century of research has documented this phenomenon, and I try to deal with it on my blog Bridging the Income Gap (http://crofsblogs.typepad.com/gap/ ).

[skh.pcola]

"The general view among liberals is that economic inequality is socially undesirable because it makes people miserable"

Presumes facts not in evidence.

How about unhappy, then? Will that suffice? Because all of the evidence provided by every pandering liberal politician is evidence that they believe that eliminating economic inequality is the key to happiness. Or votes. Whatever.

The point is that you liberals (several on this post) think that "poverty is increasing in the US." That's a strawman, and is factually unfounded. The arbitrary threshold that the government sets is so high that "poor" Americans live in conditions that median-income Euroweenies could welcome. Our poor people aren't poor, by global standards.

And besides...most poor people are poor by choice or by thier own actions. Eliminating "economic inequality" is a psuedo-communist, socialist, Democratic-party meme. What's truly American is the goal of eliminating "opportunity inequality," which I think we've accomplished. You can't make people succeed, but every single person in the US has the opportunity. For leftist twits to claim otherwise is disingenuous and a flat-out lie.

[dale]

inequality is undesirable because it leads to early death and sickness. See the works of British social epidemiologists Michael Marmot and Richard Wilkinson.

[PAL]

I've often thought that an individual's position on the left-right spectrum of the inequality question can be predicted from his/her answer to the following question: "There are large differences in income between individuals in the US. Are those differences: a) primarily the result of differences in effort, b) primarily the result of differences in luck, c) about 50/50 effort/luck?"

People who believe (a) are perfectly content if the poor are "unhappy". That means they will have some incentive to work harder.

skh above clearly believes (a). I'm more of a (b) person. It seems that someone should have done some research on this by now. Good research probably requires prospective studies, which are pretty time consuming. Can anyone give me a link or reference?