Friday, January 26, 2007

Also On Income Inequality

This via Hit and Run- Incomes and Inequality: What The Numbers Don't Tell Us.

Happiness, possibly the most relevant variable for a study of inequality, is also the hardest to measure. Nonetheless, inequality of happiness is usually less marked than inequality of income, at least in wealthy societies. A man earning $500,000 a year is not usually 10 times as happy as a man earning $50,000 a year. The $50,000 earner still enjoys most of the conveniences of the modern world. Even if more money makes people happier, it appears to do so at a declining rate, which places a natural check on the inequality of happiness.

Studies of personal happiness, based on questionnaires and self-reporting, indicate that the inequality of happiness is not growing over time in the United States. Furthermore, the United States has an inequality of happiness roughly comparable to that of Sweden or Denmark, two nations with strongly egalitarian reputations. (See the symposium in Journal of Happiness Studies, December 2005.) American society offers good opportunities for people to be happy, even if not everyone becomes rich.

If we look at leisure, from 1965 to 2003, less-educated groups experienced a bigger boost in free time than more-educated groups (Mark Aguiar and Erik Hurst, “Measuring Trends in Leisure: The Allocation of Time Over Five Decades,” Federal Reserve Bank of Boston Working Paper). In other words, the high earners are working hard for their money and perhaps they are having less fun.

It's the measures of leisure time I find to be most interesting. In other words, if you're earning a lot of money, you're likely to be working harder than someone who's not earning a lot of money. This is not to insinuate that poverty is a choice, but there is a big difference between working 40 hours per week and 60 hours per week. How bad can poverty really be in this country when we're talking about how much leisure time the poor get. It's all well and nice that the French have a 35-hour work week, but why is that the standard and more importantly, why do we have these standards in the first place? Shouldn't the amount of time you chose to work and earn money and the amount of time you spend relaxing be a matter of personal choice.

It's just sort of interesting to think about, in regards to any government benefit program which is based upon income. Taxpayers might be paying for someone working 30 or 40 hours per week, while someone working 60 hours a week at two jobs may not qualify because they make too much money. Again, just an interesting thought.


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