‘We Are Not Taxing the Very Wealthy Enough’: Runaway Inequality About to Get Worse
The United States' astronomical levels of economic inequality are poised to become further entrenched in the coming years.
Why haven’t Americans become happier over the past 50 years? Economists have trouble with that question. America’s average household wealth has doubled since 1962. We have become, as a nation, considerably richer. We should be much happier, too, at least according to conventional economic theory.
So what’s the problem? Three psychologists — Shigehiro Oishi and Selin Kesebir from the University of Virginia and Ed Diener from the University of Illinois — have an answer forthcoming in the prestigious journal Psychological Science.
We haven’t become happier, the three scholars show in their new study, because we’ve become more unequal.
“Americans are happier,” as the three put it, “when national wealth is distributed more evenly than when it is distributed unevenly.”
Psychologists have examined links between inequality and unhappiness before, but not as rigorously in one society, over time, as Oishi, Kesebir, and Diener do in their new Psychological Science research.
Previous studies have contrasted levels of inequality and happiness across nations, states, and cities and generated generally mixed results. Oishi, Kesebir, and Diener stick to one nation — the United States — and track evolving trends through four rich decades of data.
Their data come from the General Social Survey, a National Science Foundation effort that has been quizzing a broad cross-section of Americans on a variety of topics since 1972.
In all, Oishi, Kesebir, and Diener plowed through 53,043 surveys completed between 1972 and 2008, focusing first on responses to the question: “Taken all together, how would you say things are these days — would you say that you are very happy, pretty happy, or not too happy?”
Americans on average, the three researchers found, have rated themselves happier, over the past four decades, “at times of relative income equality.”
What explains this connection? Oishi, Kesebir, and Diener went digging into the data for the “psychological mechanisms” that could “account for the link between societal income inequality and individual-level happiness.” They feel they’ve found that link — in people’s sense of trust and fairness.
Over recent decades, the General Social Survey data show, Americans on average have become less trusting and less convinced they live in a fair society. And this mistrust and sense of unfairness, the researchers discovered, matches up significantly with levels of inequality.
“Americans,” write Oishi, Kesebir, and Diener, “perceived others to be less fair and trustworthy in the years with greater income disparity.”
But not all Americans. The richest 20 percent of Americans show no linkage here. And more affluent Americans also do not show less happiness in those years when income inequality increases.
That finding makes eminent sense to Oishi, Kesebir, and Diener. Lower-income people, the three note, will understandably “perceive the world to be unfair if only the rich get richer,” and this “greater income disparity,” in turn, will “disjoint and divide” their communities, leaving lower-income people less trusting of others.
Couldn’t lower-income people be less happy simply because their household incomes are falling in years of growing inequality?
The researchers took the time to test this explanation with the General Social Survey data. They found no link. “Lowered levels of perceived fairness and trust,” not reduced income, turned out to be the factors “that made low-income Americans feel less happy in the years with greater income inequality.”
Other psychological mechanisms besides trust and fairness, Oishi, Kesebir, and Diener acknowledge, could be at play here, and they urge more study to explore those possibilities.
But the three analysts remain confident in their paper’s most basic insight. Only “income growth without income disparity,” they agree, will “result in an increase in the mean happiness of a general population.”
Sam Pizzigati co-edits Inequality.org. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.