Income Inequality Inc.

I am a psychological scientist at an Ivy League University. This is the psychology behind income inequality and social mobility. Why these factors matter and what we know.

[incomeinequality]

So, the U.S. now has 540 billionaires, more than any other country...

There’s been a reshuffling on the Forbes Billionaires list for 2016, as internet tycoons Mark Zuckerberg and Jeff Bezos make appearances among the magazine's top 10 for the first time.

Yeah, for more inequality?

[incomeinequality]

Now this: Richest 62 people own as much wealth as half the world's population

The wealthiest 62 people now own as much wealth as half the world's population, some 3.5 billion people, as the super-rich have grown richer and the poor poorer, international charity Oxfam said early Monday in London.

[incomeinequality]

Thoughts on productivity, power, and luck in income inequality

“It would be foolish to deny that some people are, in fact, a lot more productive than average. It would be equally foolish, however, to deny that great success in business (or, actually, anything else) has a strong element of luck — not just the luck of being the first to stumble on a highly profitable idea or strategy, but also the luck of being born to the right parents ”

“And power is surely a big factor, too...the rise in incomes at the top largely reflects the soaring pay of top executives, not the rewards to innovation.”

“Given the reality that wealth often reflects either luck or power, there’s a strong case to be made for collecting some of that wealth in taxes and using it to make society as a whole stronger,”

“Historically, America achieved its most rapid growth and technological progress ever during the 1950s and 1960s, despite much higher top tax rates and much lower inequality than it has today.”

 “In today’s world, high-tax, low-inequality countries like Sweden are also both highly innovative and home to many business start-ups. This may in part be because a strong safety net encourages risk-taking: People may be willing to prospect for gold, even if a successful foray won’t make them quite as rich as before, if they know they won’t starve if they come up empty.”

“Inequality is inevitable; the vast inequality of America today isn’t.” 

[incomeinequality]

It's Official - The 1% Finally Own 50% of Everything

The richest 1% now own half of all the wealth in the world, a new report from Credit Suisse says...

A brand new report on how much the 1% (and especially the 0.1%) have more than the rest of us. The top now owns 50.4 per cent of all household wealth.

Take a moment with this. That means that 99% of the world’s population has to share less than 50% of the world’s resources, while a tiny fraction - a mere 1% - gets more than that. 

Perhaps it’s time to throw out those magical “bootstraps”... 

[incomeinequality]

Brand new orders have just been released by the U.S. Government to use effective insights from psychology and decision science to improve all sorts of government programs and policies. There's a lot of work to be done. But this could be an exciting and promising change. Psychology has much knowledge on making programs more efficient and effective (i.e., because it's based on how people act, not how politicians and traditional economists think they should behave). Insert backlash by people afraid of change. But those critics can be ignored when money starts being saved, government (slowly) becomes more efficient, and people are better served by their government.

[incomeinequality]

Where does everyone stand on The Minimum Wage? Federal or State mandated? $15, $12, or 0?

NY Times reports on the different perspectives, and weighs in.

Minimum wage is an income inequality issue - raising the minimum helps reduce income inequality (at least a little), and importantly improves the lives of the hard working folks at the bottom.

If this issue matters to you this is an nice overview of where some big players stand, and what's important to consider for the future of the minimum wage in the U.S.

[incomeinequality]

It turns out that customers prefer shopping from retailers with low pay ratios, according to new research...

Are you a big fan of crazy-high CEO pay? According to recent research, too bad!

Most people think that CEOs in America, on average, make about 30x more than the average worker in their company. In reality, it's closer to 350x more!

This exciting new research placed companies' CEO-to-worker ratios (e.g., 1000:1, 50:1) on different products and tested whether it affected consumer choices, and how much they would be willing to pay.

The good news is that people think that high CEO-to-worker ratios are unfair, and they prefer products made by companies with lower pay ratios. That is, people want to buy products from businesses that pay their workers more fairly, and have flatter pay structures.To convince consumers to buy from the firms with higher CEO-to-worker ratios, the products needed to be severely discounted.

This is also good news because new SEC rules will soon mandate companies to disclose this information. Ideally, down the line, this information could be placed on products like energy-savings stickers. 

The take home here is that businesses that pay their workers fairly should start to advertise this information. This could mean better sales, and it also might force other firms to pay their workers better (and their CEOs less)...

[progressivefriends]

The U.S. and Israel Have the Worst Income Inequality in the Developed World

A new report finds that the gap between rich and poor in the developed world is at its highest level in 30 years in most countries—and that the U.S. and Israel are leading the trend. - 2015/05/21

[incomeinequality]

Great NY times article on what to do about income inequality, and what Billionaires think about all of this.

[incomeinequality]

Do the Poor Make More Rational Financial Decisions Than the Wealthy?

People often assume that the poor are less competent than the wealthy. Some even suggest that the poor have flawed values or ways of thinking. But my colleagues and I have recently found that the poor outperform the rich at some financial decisions...

Great, and surprising psychological research on what it's like to make decisions when you're poor, compared to when you're rich.

Spoiler: it's not the same!

[incomeinequality]

A poll and studies suggest a willingness to rein in the rich but also some psychological obstacles in efforts to help the poor.

How about you read this great article on the role of psychology in the two most fiercely debated issues of income inequality - Taxes on the Rich, and Minimum Wage?

One interesting psychological problem is last place aversion - that people near - but not quite at the bottom, may not support minimum wage hikes, because this threatens their position in the hierarchy - they don't want to be last! 

This means we can't just raise wages of those at the very bottom - we need to think bigger than just raising the minimum wage.

[incomeinequality]

We Must Either Raise The Minimum Wage Or Lower The Price Of Lobster

Income inequality in this country is, quite shamefully, at an all-time high. People work grueling 12-hour shifts for little pay, and many single parents are forced to juggle two or three jobs just to get by. With around 15 percent of Americans living below the poverty line, there’s only one solution...

This was bound to happen at some point. Here's an informative, but lighter take on income inequality and minimum wage...

[fullpraxisnow]

Putting money into the language of time worked… Yes, the working class is long overdue for a raise.

[incomeinequality]

Los Angeles Raises Minimum Wage to $15 an Hour

The Los Angeles City Council voted 14-1 on Tuesday to increase the minimum wage, potentially setting off a wave of similar increases across Southern California...

[dailykos]

Obama says top 25 hedge fund managers make more than all kindergarten teachers combined. He's right

Obama says top 25 hedge fund managers make more than all kindergarten teachers combined. He's right

[incomeinequality]

NY Governor Makes a Surprising Plea to Raise the Minimum Wage

The industry profits, while its employees turn to public assistance because they can’t get by. Government must act.

Good news for fast food workers???

[incomeinequality]

Most Americans Think We Should Soak the Rich and Redistribute Wealth

Since 1998, Gallup has asked Americans whether they believe the government should "redistribute wealth by heavy taxes on the rich." This year, 52 percent agreed, tying the all-time high set in 2013. While there's plenty of disagreement about who exactly counts as "rich," a bare majority of the country seems...

This isn't the first poll to show this, but it's still important news. Everyday, more Americans are getting onboard with the idea of increasing taxes on the rich.

52% support isn't great, but it's not bad either. If only we could speed things up...