Middle-class state of mind

Updated
This is the study behind the “Rich people suck at empathy” story from this past Sunday’s New York Times. I was looking through it because other than the poverty line, there aren’t hard definitions of U.S. social classes, and the study had come up with a way of categorizing its subjects in order to produce results. So I was interested to see how they did it (this is pursuant to looking for a definition of “middle class,” which is frustratingly nebulous despite all the fuss about the category’s looming demise). The study equates social class with educational attainment and also uses “subjective socioeconmic status.” It might seem wrong to rely on a person’s self-perception as a means of determining their economic status – no matter how upper class I think I am, I’m not upper class if I don’t have any money, right? – but since the study is about human behavior and not tax brackets, it makes sense that how we behave is influenced by how we see ourselves. And it turns out that using this subjective measure of socioeconomic status produced the most interesting result in the paper. They asked subjects to focus on one end of an economic status ladder for the purpose of comparing themselves to one extreme or the other. Subjects comparing themselves to the bottom of the class ladder saw themselves as being of higher socioeconomic status than those comparing themselves to the top of the class ladder. What results is that subjects whose subjective socioeconomic status is manipulated to make them feel of a lower class will act that way and vice-versa (in this case affecting the accuracy of their ability to recognize emotions in others). In short, if you’re made to feel rich, you act rich. If you’re made to feel poor, you act poor. The lesson that class relativity changes our perceptions and behaviors reminded me of another recent Times piece on income inequality an excerpt from that same economics book by Eduardo Porter that we quoted the other day. (Read past the sports stuff and it gets much more interesting.)
Inequality spurs economic growth by providing incentives for people to accumulate human capital and become more productive. It pulls the best and brightest into the most lucrative lines of work, where the most profitable companies hire them. Yet the increasingly outsize rewards accruing to the nation’s elite clutch of superstars threaten to gum up this incentive mechanism. If only a very lucky few can aspire to a big reward, most workers are likely to conclude that it is not worth the effort to try. The odds aren’t on their side. Inequality has been found to turn people off. A recent experiment conducted with workers at the University of California found that those who earned less than the typical wage for their pay unit and occupation became measurably less satisfied with their jobs, and more likely to look for another one if they found out the pay of their peers. Other experiments have found that winner-take-all games tend to elicit much less player effort — and more cheating — than those in which rewards are distributed more smoothly according to performance. Ultimately, the question is this: How much inequality is necessary?
The study (I think it’s this [pdf]) makes conclusions about its being a good idea for employers to keep salaries a secret lest they destroy employee morale. What if we’re not talking about a workplace with employees but a nation with a citizenry indoctrinated in equality? What is the effect when the lower classes accept that their income will trickle down from the upper class? What is the effect of the realization that the upper class is impenetrable? This is only back-of-the-envelope figuring based on conclusions studying something else, but it’s interesting to think about.

Happiness

Middle-class state of mind

Updated