HAT Manifesto Part 1/3 - Rubric Cube - 250803 edit

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 6 The Economics of Labor Markets
Chapter 20 of 36 Income Inequality and Poverty
Section 10 of 20
…
What to Make of Rising Inequality
(This article here in chapter)
An economist offers his perspective on the rise in U.S. income inequality.
What the Numbers Don't Tell Us - Tyler Cowen, New York Times
The growing inequality in wealth and income has led many people to question whether the contemporary American economy is rigged in favor of the rich.
While there is little doubt the gap between the wealthy and everybody else has widened in recent years, the situation is not as unfair as some of the numbers seem to imply.
…
Much of the measured growth in income inequality has resulted from natural demographic trends.
In general, there is more income inequality among older populations than among younger populations, if only because older people have had more time to experience rising or falling fortunes.
More-educated groups show greater income inequality than less-educated groups.
Uneducated people are more likely to be clustered in a tight range of relatively low incomes.
The educated will include a greater range of highly motivated breadwinners and relaxed bohemians, and a greater range of winning and losing investors.
A result is a greater variety of incomes.
…
Since the United States is growing both older and more educated, income inequality will naturally rise.
Thomas Lemieux, professor of economics at the University of British Columbia, estimates these demographic effects account for about three-quarters of the observed rise in income.
Rising income inequality is not just a result of unfairness or bad public policy.
…
In any case, income is not the only or even the most important measure of inequality.
Inequality of consumption - the difference between what the poor consume and what the rich consume - does not show a significant upward trend.
Consumption is not an ideal indicator of well-being.
A high or steady level of purchases may reflect growing debt, and the ease of buying a big-screen TV does not reflect a comparable ease in buying good health care.
…
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 the inequality of happiness is not growing over time in the U.S.
Furthermore, the U.S. has an inequality of happiness roughly comparable to Sweden or Denmark, two nations with strongly egalitarian reputations.
…
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.
The high earners are working hard for their money and perhaps they are having less fun.
The broader philosophical question is, why we should worry about inequality of any kind at all?
Life is not a race against fellow human beings.
We should continue to improve opportunities for lower-income people, but inequality as a major and chronic American problem has been overstated.
…
In the U.S is there a correlation between level of income/wealth and level of happiness?
ChatGPT:
Yes — in the U.S., there is a correlation between income and happiness, but it’s not linear or unlimited.
1. The General Relationship
Numerous studies (including by economists Daniel Kahneman and Angus Deaton) show higher income correlates with higher life satisfaction, especially at lower income levels.
As income rises, people can better afford basic needs, healthcare, and security — key components of well-being.
However, the effect weakens at higher incomes — each additional dollar yields a smaller increase in happiness.
2. The “Income Plateau” Debate
The original 2010 Princeton study found happiness increased with income up to about $75,000 per year (in 2010 dollars), after which it leveled off.
Later research (including Kahneman & Killingsworth, 2021) updated this finding: happiness continues to rise with income, but more slowly — and mainly for people who already find life satisfying.
Those unhappy at low incomes gain little happiness from additional money beyond a certain point.
3. Why the Link Exists
Higher income increases control, security, and access to life-enhancing goods including education, leisure, and safety.
But happiness depends also on social comparison — people judge well-being relative to peers.
Beyond basic comfort, relationships, purpose, and health matter more than income growth.
4. U.S.-Specific Findings
Americans with higher incomes report higher life satisfaction and positive emotions, but also higher stress in some cases.
Regional cost of living matters — $75,000 in Mississippi buys much more comfort than $75,000 in New York City.
Wealth inequality affects perception: happiness gaps widen when people feel [or are induced to feel] economic unfairness.
Summary
In the U.S., income and happiness are positively related, especially for those escaping financial stress or poverty.
Yet beyond middle- to upper-middle income levels, the happiness gains diminish.
Money improves happiness up to the point where basic comfort, security, and freedom of choice are achieved — after that, purpose and relationships matter more than paychecks and wealth.
… …
correlation between wealth and happiness
tomi to kōfuku no sōkan kankei
富と幸福の相関関係