THE Easterlin paradox, named for economist Richard Easterlin, reckons that higher incomes do not necessarily make people happier. Since Mr Easterlin first made his conjecture in 1974, economists’ views have evolved: money matters, studies suggest, but only up to a point. Become rich enough, and a bigger paycheque no longer leads to more happiness. Yet a new NBER working paper by economists Betsey Stevenson and Justin Wolfers, both of the University of Michigan, casts doubt on this chestnut. They use a trove of data generated by Gallup, a polling firm, from its World Poll. Gallup asked respondents around the world to imagine a “satisfaction ladder” in which the top step represents a respondent’s best possible life. Those being polled are then asked where on the ladder they stand (from zero to a maximum of 10), and how much they earn. Though some countries seem happier than others, people everywhere report more satisfaction as they grow richer. Even more striking, the relationship between income and happiness hardly changes as incomes rise. Moving from rich to richer seems to raise happiness just as much as moving from poor to less poor. One never really grows tired of earning more.
Obama and several other cabinet members rushed this week to day they would turn back some of their salary to the U.S. Treasury as a gesture of solidarity with federal workers facing furloughs. So far, Secretary of State John Kerry, Attorney General Eric Holder, Defense Secretary Chuck Hagel, Treasury Secretary Jack Lew, and Homeland Security Secretary Janet Napolitano have all said publicly that they would be giving back portions of their $200,000 salaries.
A nice gesture, I have to admit. Something that I think helps in regards to the optics of the whole situation. However, Joe Biden isn’t all in, yet:
Others, like Biden, have said they will return a portion commiserate with the number of days their department’s employees are furloughed.
But Biden’s decision not to follow Obama’s lead and return a flat portion of his salary — and the possibility that nobody on the vice president’s staff will be furloughed — has already prompted speculation in the media that Biden was looking to sidestep the pay cut.
I think that there are two reasons for Biden holding onto his money – actually three:
He’s a democrat. And democrats don’t like to part with their money for charitable reasons.
He rightly thinks that he’s earned the money and has a right to keep it.
He doesn’t have a lot of money and so a $11k cut would hurt.
Actually, I suspect all three reasons contribute to Biden’s reluctance to subject himself to a voluntary tax, but The Hill takes the high road and points out that Joe isn’t independently wealthy:
Unlike some members of the Obama Cabinet, he is not independently wealthy.
Obama’s net worth is estimated at between $3 million and $8 million and Secretary of State John Kerry’s wealth is in the range of $200 million according to The Hill’s “50 wealthiest lawmakers: list.
Biden’s net worth in comparison, according to the Center for Responsive Politics, is around $230,000, an amount roughly equivalent to his annual salary.
When I first read that this afternoon I kinda nodded and was like, “yeah, that makes sense. He should be expected to give up 5% of his net wealth in a show of support.” However, it then hit me, how does a senator who makes north of $150,000 a year, and now a Vice President who makes north of $220,000 have a net worth of only $230,000?
How is that possible?
If this is true, it means that the Vice-President of The United States of America is almost living hand to mouth.
It may not buy you love either, but it sure makes it easier to drink good beer. I don’t know exactly what this means, but I think it’s a combination of the ability to earn money and then the measure of the power of that income via the availability of inexpensive goods that makes that salary more valuable.
I’ve done a bit of reading in the last few weeks and have been on a “trade offs” kick.
So lemme ask ya. Would you rather:
Live in a place where there was more equity but people were poorer; that is the poorest ranked 2 out of 10 while the rich ranked 4 out of 10.
Or, live in a place where there was less equity but everyone was wealthier; that is the poorest ranked 4 out of 10 but the wealthiest ranked 9 out of 10?
In the second case the wealthiest are not only more wealthy in terms of ratio; more than double the poorest, but they are more percentage points richer as well – 5 rather than just 2.
This is the fundamental choice before us. There are those that think that we should be more equal, that the spoils of the rich should be more equitable to the spoils of the poorest among us. And these people are willing to live in a world that is poorer in general, less advanced in general, in order to achieve this equity.
Then there are people would rather increase the overall prosperity of the world even if it meant that the wealthiest among us were astronomically rich. Rich too the point that most of us couldn’t imagine.
Notice that in the example, the second option puts the poorest at the same level as the wealthiest in the first.
I’m reading more and more on the topic of equality. What it means and how to measure it.
But I have to maintain that we are the richest humans who have ever lived. Today, in the USA have life better than the richest capitalists, pontiffs or kings who lived just in the last 100 years.
I recently discovered Spotify whereby I can listen to virtually any song I can think of. That is, I have access to digital stereo playlists of every single Mozart piece he wrote. Ever. For free. On demand.
Next up? Haviah Nagilah by Neil Diamond. After that? The Lucky One by Alison Krause And Union Station.
With all the talk from Obama about the rich, the elite and the 1%, I often wonder, “Do we really have it that bad?”
What might we use as a measurement to gauge whether or not we really are better off. The media is full of comparisons, we often hear the reports that the rich are getting richer while the poor are getting poorer. That the middle class is under attack and is losing; indeed, shrinking.