Income v. Control

This New Yorker article by John Cassidy plumping for a move to a “relative deprivation” standard for the poverty line (the author wants poverty to be defined as 1/2 the median) is not only simply preposterous on its face (if the median goes up to $100,000, which it will in the next several decades, then $50,000 per annum, an astonishing sum in absolute terms, will count as the cusp of “poverty”), but also full ill-reasoned and researched ideas about the importance of relative position.

For instance, the Marmot British Civil Servant’s study. This is what the author says:

Relative deprivation is also bad for your health. In a famous study conducted between 1967 and 1977, a team of epidemiologists led by Sir Michael Marmot, of University College London, monitored the health of more than seventeen thousand members of Britain’s Civil Service, a highly stratified bureaucracy. Marmot and his colleagues found that people who had been promoted to the top ranks—those who worked directly for cabinet ministers—lived longer than their colleagues in lower-ranking jobs. Mid-level civil servants were more likely than their bosses to develop a range of potentially deadly conditions, including heart disease, high blood pressure, lung cancer, and gastrointestinal ailments.

This is in supposed to help justify the importance of relative income in order to get us to the author’s sophisticated policy prescription:

Therefore, the way to reduce relative poverty is to reduce income inequality—perhaps by increasing the minimum wage and raising taxes on the rich.

About which Ross Douthat notes:

The New Yorker is a very smart magazine in many ways, but whenever any of its writers talk about public policy, you get the sense that they were cryogenically frozen back in the Nixon era, and just finished getting de-iced.

So true! But back to the civil servants study. This is what Sally Satel and Nicholas Eberstadt say in the course of their rigorous debunking of the idea that inequality per se has a negative health effect:

S. Leonard Syme of Berkeley’s School of Public Health was one of the first to describe the control-of-destiny theory when he examined the landmark Whitehall studies performed by researchers at University College in London. The studies examined workers in the five grades of the British Civil Service, all of whom have access to nationalized health care. The researchers, led by Michael Marmot of the University of London, were not surprised that the civil servants in the lowest grade suffered heart disease at about three times the rate of administrators in the highest, or fifth, stratum, even after controlling for obvious health risks like smoking. They were puzzled, however, to find that even highly paid professionals in the fourth grade suffered twice as much cardiovascular disease as top-ranking administrators.

What appeared to explain this finding was the fact that these workers had little control of destiny; their jobs were fraught with responsibility, but they could exercise little authority. Marmot’s practical suggestion was that employers create ways for workers to have more latitude and to break the monotony of their tasks.

Another term for the “low control of destiny” phenomenon, developed independently by the psychologist Martin P. Seligman in his work with animals, is “learned helplessness”—that is, a posture of defeat and resignation, often accompanied by physical symptoms, that follows repeated failed attempts by the animal to change its environment. Eventually the animal “learns” to adopt a helpless, passive stance because there is little it can do to influence events. People, too, can become passive when they feel unable to control their lives.

So, which is it?! Simply having relatively less makes you sick? Or having too little control makes you sick? Of course, I’m persuaded of the latter. This is, in fact, one of the best explanations for the fact that wealthier people are generally happier. People who have a greater sense of autonomy and control over their environment are happier. A higher paying job is more likely to involve more autonomy and control than a lower paying job. So people with higher paying jobs are more likely to have a sense of autonomy and control. And people with higher paying jobs have, well, higher paying jobs. So people who earn more are likely to say they are happy. As Marmot’s study shows, jobs with lots of money but little control aren’t such a good deal. But then, why worry about the money at all?

(By the way, Cassidy quotes Eberstadt about the government determines the poverty line. I wonder if he also asked for Eberstadt’s analysis of health and income inequalities.)

Almost everywhere that the leftist sees some malady of the body or soul caused by low relative position on the income scale, the libertarian-minded intellectual will look at the same data and see too little autonomy and control — too much learned helplessness. That’s why Murray’s new book is called In Our Hands. There is little you can do to help people become more happy that is as effective as devolving to the individual, family, and community the locus of control.

Conceptually, the piece is just a mess. Check this out:

The conservative case against a relative-poverty line asserts that since some people will always earn less than others the relative-poverty rate will never go down. Fortunately, this isn’t necessarily true. If incomes were distributed more equally, fewer families would earn less than half the median income.

This directly precedes the sophomoric unfrozen Johnsonite policy punchline quoted above. Now, it’s true that there is some pattern of redistribution such that the percentage of families earning less than half the value of the median does not stay constant. (And there is also a bunch of “equalizing” patterns of redistribution that do nothing at all to change the proportion of families below half the median. Example: the shift from [10, 100, 1000] to [50, 110, 950].) But Cassidy has just gone to great lengths to convince us that it is relative position that matters oh so much. By his own lights, the fact that the proportion of the population making half the value of the median is not necessarily fixed is an irrelevant sideshow. There will always be the exact same percentage on either side of the median, or on either side of the median between the median and the bottom. And almost every example he gave us primarily supports the idea it is the order of positions that matters, not the distance between positions. In order to have an argument for compressing the income scale, you need to say more about the importance of the size of the gaps between positions. (And isn’t the bitterness of silver larger the smaller is the gap from the gold?) But the abolition of the ordering itself is a logical impossibility.

Furthermore, the degree to which inequality bothers us appears to be a function of ideology, not a fixed fact about the human dominance hierarchy that sober policy must take into account.

I think the positional goods gambit is the redistributionist egalitarian’s end game. If it fails, and I’m pretty sure it will (its assumptions are no more realistic than the neo-classical welfare theory is meant to replace; our world simply is not a grim, zero-sum Hobbesian jungle of positional competition), then there’re really nothing left for the Gini-mimimizing type egalitarian to draw on. Is there?

Author: Will Wilkinson

Vice President for Research at the Niskanen Center