On: Wealth and Happiness
Episode: 189
Date: March 2020
Background: Marketing professor, entrepreneur, author of ”The Algebra of Happiness”.
Key Subjects:
- Mixed relationship between wealth and well-being. (see also “Making Sense — Kahneman”)
- As wealth increases, well-being:
- Levels out for the “experienced self”:
- In the moment happiness.
- Increases up to USD 75k per year, then levels out.
- Continues to increase for the “remembered self”:
- Retrospective (achievements, rewards, etc.).
- Exposed to more opportunities, experiences.
- Have the means to hire people for the stuff you don’t want to do.
- Of course, more wealth is not always and not necessarily better.
- Can achieve perfectly acceptable well-being with average wealth.
- Increasing wealth creates its own (different) type of stressors.
- Capitalism creates ever more incentives (to make, spend money).
- Drives segmentation and separation.
- Levels out for the “experienced self”:
- As wealth increases, well-being:
- Greatest wealth transfer in history to wealthiest generation in history.
- Young carry the burden, old enjoy the spoils.
- “Socialist economy for the boomers”.
- Inflated asset prices due to low interest rate.
- Lower corporate and wealth taxes.
- Social Security.
- Self-corrects through war, famine, revolution.
- In the middle of a “soft-revolution” now.
- Wealth-tax probably not a useful solution.
- Violates “property principle”: taking away someone’s property.
- Triggers capital flight.
- More sensible options:
- More equitable corporate taxes.
- Capital gain taxes in line with income taxes.
- Better government spending (infrastructure, education, technology).
- Means-testing Social Security.
- Young carry the burden, old enjoy the spoils.
- Dangers of Big Tech monopoly power.
- Small businesses are forced to use it.
- You may not like coal-fired plants, but you need electricity.
- No new seed funding for potential competitors.
- Doesn’t make economic sense to try and compete.
- No competitive incentives to invest and differentiate to do the “right thing”.
- For instance, investing in technology to remove fake news from platform.
- Too much regulatory influence.
- Not paying or held responsible for any externalities.
- Small businesses are forced to use it.