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.
Very intersting article. America has the widest distribution of wealth in the OECD world ( http://www.savingtoinvest.com/2008/10/americas-income-and-wealth-inequality.html ) yet the poorest Americans are the worst of amongst the OECD countries. You can see why this issue is a key policy platform for Obama.