Wednesday, February 13, 2008

happiness and (in)equality

From Arthur Brooks in the WSJ on inequality in terms of economics and other arenas...

Brooks is the author of Who Really Cares-- a book on the charitable activity of groups by political affiliation and policy preferences...

All of the major Democratic candidates believe that conservatives have purposively rolled back income equality -- which liberals equate to social equality -- since 1980. Liberal columnists routinely express this conspiratorial point of view, suggesting that conservatives want to dismantle all of the institutions of the New Deal and Great Society.

John Edwards was most prominent among the candidates with this view. As for "conservatives" (of various stripes), few have the stomach to pursue such significant change.

Assuming a Democrat wins the White House in 2008, we can expect steeper tax rates to take more from higher income earners, and more government spending to redistribute resources to low-income earners and the middle class.

This is more likely in combination with a Democratic Congress. But I don't see the public as excited about either new taxes or big new spending programs. Moreover, the pursuit of debt in the Bush years makes more spending difficult to do.

The Democrats are correct that income inequality in America has increased over the decades. The U.S. Census Bureau, for example, measures this by using a "Gini coefficient," in which zero indicates no inequality (all incomes are the same) and one is perfect inequality (one person has all the income). Over the past 40 years, the Gini coefficient in this country has increased by a quarter, to .47 today from .39 in 1970. In European countries, Gini coefficients generally sit below .30, indicating substantially less income inequality.

That's the key statistic for measuring income inequality. Now, to Brooks' thesis:

Yet income is just one item of importance in the lives of Americans. There are many others -- from love to faith to happiness -- that we care about, some of them far more. Egalitarians never ask if we suffer from inequality in these areas. If they did, they might be pleasantly surprised....

For example, the 2004 General Social Survey's measure of happiness generates a coefficient for the inequality of American happiness of .18, while the 2002 International Social Survey Programme produces a coefficient of .20. These are lower than are found anywhere else in the world. Moreover, while the average happiness level in America has not changed much since the early 1970s (and remains above that of most of our European allies), the inequality in our happiness has fallen by about a point since then.

Americans enjoy similarly low inequality with regard to other quality of life measures, such as optimism about the future (.20). In terms of what really matters most to Americans, we may be more equal than we thought.

Why don't those who denounce economic inequality so strenuously focus on these nonfinancial items? There are two plausible reasons. First, egalitarians might believe that money truly is the most important thing for American society (in other words, that the European caricature of the shallow, money-obsessed American is accurate), in which case we can redress inequality simply by moving some cash around through redistribution. If that is the reason, it would be ironic, coming as it does from people who usually take a dim view of what they characterize as American materialism.

But, then, how could people be so happy? This only makes sense if the (economic) egalitarians are wrong in their assumptions about others. Maybe money is most important to them-- and so they imagine that it is vital to others...

I have no doubt the egalitarians among our politicians and pundits want the best for America. And if creating opportunities to prosper requires public resources and thus taxes to pay for them, so be it. But to focus on inequality -- and then only inequality in income -- creates policies based on either rank materialism or raw envy. These motivations do little to inspire, and even less to lead.


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