Inequality Revisited

We've had several discussions on this site about the possible problems with rising economic inequality, apart from increases in absolute levels of wealth.  I hope I'm not duplicating someone else's post here, but Cornell economist Robert H. Frank has come out with a great little paperback, entitled "Falling Behind," which makes a strong case that rising inequality can make people worse off, even when their standard of living is increasing in absolute terms.  Here's a link to the NY Times review.  The book is short and sweet, weighing in at a very readable 125 pages.  Frank brings together and distills a great deal of information to make his case.  (He has, for example, some wonderfully eye-popping charts contrasting the distribution of economic gains in the three decades after WWII with the distribution of economic gains in the last three decades of the 20th century.)  And his conclusions are very consistent, I think, with CST's insistence that inequality is an important concern in its own right.  Highly recommended.

UPDATE:  MOJ reader Patrick O'Donnell passed along these links to commentary on Robert Frank's latest book by Seton Hall law prof. (and also MOJ reader) Frank Pasquale over at Concurring Opinions.  Pasquale's commentaries are well worth reading, and I commend them to MOJ readers.  Pasquale takes issue with Frank's reliance on happiness surveys to make his argument that inequality makes people worse off.  I share Pasquale's basic concern, because I (like him) reject a subjectivist ethic and agree that envy is something to be discouraged.  Despite this (and I don't think Pasquale would disagree with me here), I think that Frank's argument ought to be recognized as an interesting and positive development within the field of economics because it takes neoclassical economic assumptions to task on their own subjectivist terms for neglecting an important dimension of human welfare (as they understand it).  I always like it when people are hoisted on their own petards, so kudos to Frank for that contribution.   But, even beyond that, I think the significance of the happiness data on which Frank relies may ultimately survive -- or at least be rehabilitated against -- Pasquale's important line of attack.  While envy might not be an edifying sentiment, it's a real and predictable one, and one whose incidence policymakers are justified in taking into account in crafting social policy.  Pasquale points towards objective consequences of inequality that he thinks are valid considerations for crafting social critique.  I agree with him that those consequences are real and important, but let's set them aside and focus on the more subjective consequences whose significance he questions.  Within a particular cultural context, or, given the breadth of Frank's data, a particular conception of (fallen) human nature, high degrees of inequality appear predictably to foster heightened degrees of envy and dissatisfaction within human socities.  And, in turn, those heightened degrees of envy (predictably) (1) foster materialist and consumerist arms races of the sort Frank describes, and (2) undermine social cohesiveness.  It seems to me that the (subjective) phenomena Frank is describing predictably yield (objectively) troubling social dynamics that are a proper subject of concern even for those of us who reject the notion that subjective feelings of happiness ought to be the central basis for evaluating social  structures.  I guess I'm saying that I agree with both Franks.  I agree with Frank Pasquale that what matters are objective criteria of human well being ,and I agree with Robert Frank that the  data on the relationship between inequality and subjective happiness is relevant.  These two positions are consistent, I think, because the subjective unhappiness/envy that arises from excessive inequality generates an objectively dysfunctional social order.