One passage that I found particularly interesting in Chapter 6 is when Wheelan discusses relative income. Wheelan first states that tradition economists believe that we should not care about the gap between rich and poor as long as we are all living better. That is, we should not care about our income relative to others as long as the economy is advancing and everyone is being made better off. Wheelan then goes on to explain how much influence relative income actually has on us.
Relative wealth becomes very important when determining one's utility, or happiness. There was a survey done by Robert Frank, a Cornell economist. He asked responders whether they would rather earn $110,000 when everyone else is earning $200,000, or if they would rather earn $100,000 when everyone else is earning $85,000. The survey found that most Americans would choose the second option, even though they would be earning much less income. Wheelan explains that envy may play a role in this decision but also that "in complex social environments we seek ways to evaluate our performance. Relative wealth is one of them."
This part of the chapter really struck me as interesting. Would most Americans really rather live worse off just to be ahead of everyone else? According to the experiment, the status of others really plays into how we evaluate our own achievements.
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