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.
• 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.
• 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.