Inequality of happiness has fallen in the last 30 years while income inequality has grown. Income inequality Gini coefficient is 0.44 (high) but happiness inequality Gini is 0.18 (low). This is super interesting as most people believe happiness is linked with keeping up with the Joneses.

The following is an article I wrote in BusinessWeek on Aug 25, 2008:

Bill Clinton, George W. Bush, and Barack Obama have
each stamped elections with their innovative technology

Technology and an appreciation of how to use it have always been
important to political campaigns. Franklin Delano Roosevelt used radio
to get his message across effectively to voters. Lyndon Johnson rode a
helicopter to get him around Texas in his famous race for the Senate.
John F. Kennedy understood the power of television better than Richard
Nixon during the race for the Presidency in 1960. And Republican
operatives in the 1970s built direct mail into a fund-raising behemoth
that powered party gains for 20 years.

The current generation of Presidential candidates—and their
advisers, such as James Carville, Karl Rove, and David Axelrod—will
likely go down in history as even more innovative in their ability to
use technology to an advantage.

The 1992 Clinton campaign understood advertising via cable
television. Clinton’s advisers realized that instead of expensive
commercials on the networks, they could target a cable ad buy right
down to a Zip Code. They built an extremely sophisticated procurement
system to buy ads with the greatest impact. This was consequential:
Clinton is the only two-term U.S. President who never received a
majority of the vote, and one could argue that instrumental to his
victory was his campaign’s understanding of technology.

Today, all candidates for high political office follow the Clinton cable TV playbook.

Bush Microtargeting

In 2004, tech use by George W. Bush’s campaign defined his
reelection. Bush’s advisers, including Rove, invested in better ways to
reach voters in heavily Democratic areas. Precincts in inner cities and
certain suburbs have traditionally been 70% to 80% pro-Democrat;
Republican candidates wouldn’t even campaign there. But the Bush
campaign honed microtargeting to reach people who voted infrequently
and who might be open to their message.

The Bush campaign assembled information on millions of voters in
swing states and bombarded those people with messages they wanted to
hear. The campaign targeted people who vote often and are registered
Democrats, but whom the Bush team thought it had a chance of
persuading.

According to Adrian Gray, the National Voter Contact Chairman for
Bush/Cheney 2004, the campaign was especially effective in targeting
African American voters in Ohio. Nationally, 8% of African Americans
voted for Bush, but in Ohio he received 16% of the African American
vote. The Bush campaign also focused on New Mexico, a state Bush lost
in 2000 by 366 votes, and microtargeted Hispanics. Result: The white
vote for Bush fell 2% in 2004, but his Hispanic vote increased
12%—enough to put him over the top in the state.

Tipping the Balance

This microtargeting strategy was the difference in the election.
Bush certainly would have lost without such successful targeting.
Essentially, Karl Rove took a page from the Oakland A’s highly
successful general manager, Billy Beane (the key subject of the best
seller Moneyball), and followed the data rather than simply gut instinct.

Now, just one election cycle later, most major candidates from both
parties have used sophisticated microtargeting. As it happens, we at Rapleaf
help many candidates, organizations, and unions—including some involved
in the 2008 election—analyze voters better to engage and activate
supporters.

This Presidential cycle has already seen a highly improbable upset
for the Democratic nomination. Barack Obama beat his (initially) better
financed and more entrenched opponent, Hilary Clinton, at least in part
by deploying better technology. Obama’s campaign strategist, Axelrod,
has built a system from the ground up that does something quite simple:
It asks people for their help.

The Third “Ask”

In politics, supporters traditionally get two “asks” from
candidates: one for money, and one for a vote. That’s it. That means
most of the campaign work is done by a few paid staffers. Not a very
participatory democracy.

The Obama campaign has turned this notion on its head and built a
community involvement strategy. Axelrod and his team realized that
supporters of a political candidate are passionate and want to help.
And while most have full-time jobs and families, and can’t spend
weekends knocking on doors, they all have five minutes to spare to help
out. The Obama campaign has brilliantly taken advantage of this by
actually asking people for help. They’re letting a large number of
people do a small amount of work each.

So if you go to an Obama rally (or just sign up on his Web site),
you might be asked to call three voters in a swing state. Or if they
know you are a member of Digg
(the popular site that lets users vote on articles of interest),
Obama’s people may ask you to Digg an article that is favorable to
Obama or critical of his opponent. Or they might ask you to put a
bumper sticker on your MySpace page.

In 2012, all major candidates will be leveraging their supporters more
effectively. But for now, Obama’s campaign has the technology
advantage.

See BusinessWeek.com’s slide show for more on tech-savvy Presidential candidates.

(special thanks to Vivek Sodera for his help and edits)

Over the last thirty years, income inequality in America has gone up significantly (overall income has also gone up).   However, happiness levels have stayed about the same. 

One would think that as income inequality increase, overall happiness would go down (as your relative wealth to others around you is often cited as a big factor for happiness).  

Maybe it is because that leisure inequality is also increasing but it is enjoyed by the exact opposite people that benefit from income inequality.  Contrary to popular belief, over the last thirty years there has been a huge spike in leisure in America.  People have way more time today then they did before.   In fact, if you are reading this blog, it probably means you have too much time on your hands 🙂

The interesting thing is that, according to Keith Chen (Associate Professor of Economics at Yale) most of the gains in leisure time over the last 30 years are being enjoyed by the people who are on the low end of income inequality.

So maybe people are just optimizing for what is important to them.   People who gain happiness from money are optimizing to build wealth and people who gain happiness from leisure are optimizing for more time away from work and household chores.

Any sales manager knows that incentives radically change behavior of their team.

George W. Bush is president because his team better understood incentives than his opponents.   Bush won two of the closest presidential races in history and incentives most definitely affected the spread.

The Bush campaign paid their media advisers a flat fee in both the 2000 and the 2004 race.  Typically media advisors are paid as a percentage of their spend.  This encourages them to spend lots of money so that they can earn millions of dollars in commissions.  This has perverse incentives as it encourages media advisors to focus on television which might not always be the best choice.  It is probably why both Gore and Kerry (who paid their media advisers the traditional way) overspent on TV ads and under-spent in other mediums.   In 2004, the Bush campaign focused much of its dollars on organizing and away from TV – partially because senior campaign staffers were mainly incented to win and not financially incented to run more commercials.  If Gore or Kerry had changed the incentives for their media advisers, we might have seen a race with a different outcome.

Thanks Jeremy Epstein for sending me this article:
They Always Buy the Ten-Cent Wine

snip:

Was emailing a friend who works for an investment bank and got this SUPER long disclaimer: