The general view among liberals is that economic inequality is socially undesirable because it makes people miserable. But in reality, actual human beings aren’t shocked and outraged at the enormous incomes of software moguls and CEOs. They tend rather to hope that their kids might become the next Bill Gates, says Arthur C. Brooks, visiting scholar at the American Enterprise Institute.
The egalitarian argument says that 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:
But the egalitarians misinterpret the experimental evidence, says Brooks:
Perhaps in a world where there is no opportunity for advancement, an important concern is how one’s income measures up to others. In the real world where people believe there is opportunity, however, one’s own income potential matters a great deal more than what others are earning, says Brooks. Some studies even find that the happiness of workers rises as the incomes of others climb relative to their own, because they see the incomes of others as evidence of what they themselves can achieve.
Source: Arthur C. Brooks, The Left’s ‘Inequality’ Obsession, Wall Street Journal, July 19, 2007.
For text: http://online.wsj.com/article/SB118480740231771091.html
For more on Social Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=28
FMF Policy Bulletin/ 24 July 2007
