Articles

Economic inequality goes well beyond the bank account

If President Trump’s plan to cut individual and corporate taxes is enacted, it would accelerate the rise of income inequality in America. Economists have analyzed the effects such cuts would have on the economy, but cuts would also have an impact on people’s lives beyond money. Economic inequality has a profound impact on people’s emotions, health, and thought processes that go well beyond their bank accounts.

Discussions of inequality usually focus on the poor, and tax cuts often result in cuts to safety-net programs that indeed make the poor worse off. But the most immediate effect of tax cuts is to make the rich even richer. Depending on your politics, that might seem fair or unfair. But regardless of political leanings, data from psychology and neuroscience suggest a less obvious impact: Making the rich richer actually makes life worse for everyone else, including the middle class.

The reason has nothing to do with envy. Most Americans admire the wealthy and would rather join them than beat them. Nonetheless, humans can’t help comparing themselves to each other. When others around us get richer, it raises our standards for how much is “enough.” When your friends and neighbors start installing gleaming quartz countertops, the granite that made you proud a few years ago starts to look a little shabby. Just as it takes more money to feel middle class today than it did a century ago, it takes more to feel middle class when others around us get richer.Read the entire article on The Boston Globe