10% Happier: Stevenson and Wolfers talk wealth inequality and redistribution on NewsHour
More money makes you happier...right? Professors Justin Wolfers and Betsey Stevenson say that’s accurate, to a point. “It’s a truism, but it’s false,” states Wolfers plainly on a February 28, 2019, segment from PBS’s NewsHour. “Rich people are happier than poor people, and that’s true all the way along economic distribution,” Wolfers continues. But Stevenson points to diminishing marginal return, which shows that happiness isn’t exclusively a dollar value but a percentage. “Increases in income keep making you happier, but they’re making you happier at a decreasing rate,” says Stevenson.
Wolfers and Stevenson have conducted extensive research on the relationship between wealth inequality and happiness. The PBS piece also features research from epidemiologists Richard Wilkinson and Kate Pickett, who disagree with Wolfers and Stevenson, saying that wealthy people living in unequal societies are less happy than wealthy people living in more equal ones. Wolfers and Stevenson say that this view is going too far, with Wolfers citing a recent study that tracked Swedish lottery winners, referencing that “folks who won bigger lotteries are much happier than folks who won smaller lotteries, who are much happier than folks who won no lottery whatsoever.” Summarizing, Wolfers states “turns out, big bump in income, big bump in happiness.”
Stevenson argues that inequality isn’t necessarily in a number, but that “The relationship is with the percentage change.” This is an argument for redistribution, where understanding that taking a 10 percent boost in income from a millionaire and distributing it amongst lower-income individuals to make each of them 10 percent happier increases overall happiness. Stevenson concludes with a nod towards the benefits to such distribution, stating that such a move would “sacrifice...one person with one decrease in happiness that’s been offset by happiness that’s 20 times the size.”
Watch the full piece here.
Betsey Stevenson is an associate professor of public policy at the Ford School, with a courtesy appointment in the Department of Economics. She is also a research associate with the National Bureau of Economic Research, a fellow of the Ifo Institute for Economic Research in Munich, and serves on the board of directors of the American Law and Economics Association.
Justin Wolfers is a professor of public policy and economics. He also serves as a member of the Congressional Budget Office Panel of Economic Advisers.