Income opportunity, not equality, makes us happy

6 08 2007

Arthur C. Brooks in City Journal

Rising inequality makes for good political fodder. “When I graduated from college, the average corporate CEO made 20 times what the average worker did. Today, it’s nearly 400 times,” said Virginia senator James Webb in his response to President Bush’s State of the Union address this year. “In other words, it takes the average worker more than a year to make the money his or her boss makes in one day.” Former North Carolina senator John Edwards, who sought the Democratic presidential nomination in 2004 and is seeking it again in 2008, based his first campaign almost entirely on the contention that we are “two Americas, not one: one America that does the work, another America that reaps the reward.”

Edwards is one of a group of liberal politicians, policymakers, and social activists who want to reduce economic inequality through greater taxation and redistribution of wealth. And their plan draws inspiration from a particular academic theory: that inequality is socially destructive because it makes people miserable. As a scholar working in the field of public policy, I have long witnessed hand-wringing about the alleged connection between inequality and unhappiness. What first made me doubt this prevailing view was not some new scholarly study but rather that when I questioned actual human beings about it, few expressed any shock and outrage at the enormous wealth of software moguls and CEOs. On the contrary, they tended to hope that their kids might become the next Bill Gates.

Were these people somehow unrepresentative of America? Or was the academic consensus wrong? I set out to discover which it was. What I found was that economic inequality doesn’t frustrate Americans at all. It is, rather, the perceived lack of economic opportunity that makes us unhappy. To focus our policies on inequality, instead of opportunity, is to make a grave error—one that will worsen the very problem we seek to solve and make us generally unhappier to boot.

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