Money Buys Happiness? Not After You Hit Six Figures

Five years ago I took Michael Shermer to task for pushing pseudoscience in his bungled attempt to argue (in agreement with Sam Harris and myself) that moral philosophy could and should be retooled into a proper empirical science, the same way every other philosophical subject has before (from cosmology and philosophy of mind, to actual biology and physics), in Shermer vs. Pigliucci on Moral Science. There I pointed out how Shermer violated basic tenets of skepticism and tried selling some snake oil wigwash as established science. I made some points about the (non-peer-reviewed) study he mis-used and showed that it supported just as easily conclusions quite the contrary of his own. And that this is therefore not what Sam Harris and I mean by turning morality into a science. We mean an actual science. With standards.

Well, just this year a new, large, and fully peer reviewed study was published that confirmed nearly every point I made. Here I’ll summarize the findings of that study, and their significance for moral and political philosophy, written by Andrew Jebb, Louis Tay, Ed Diener, and Shigehiro Oishi, “Happiness, Income Satiation and Turning Points around the World,” Nature: Human Behaviour 2.1 (January 2018): pp. 33-38.

Approach and Basic Findings

The official abstract reads:

Income is known to be associated with happiness, but debates persist about the exact nature of this relationship. Does happiness rise indefinitely with income, or is there a point at which higher incomes no longer lead to greater well-being? We examine this question using data from the Gallup World Poll, a representative sample of over 1.7 million individuals worldwide. Controlling for demographic factors, we use spline regression models to statistically identify points of “income satiation.” Globally, we find that satiation occurs at $95,000 for life evaluation and $60,000 to $75,000 for emotional well-being. However, there is substantial variation across world regions, with satiation occurring later in wealthier regions. We also find that in certain parts of the world, incomes beyond satiation are associated with lower life evaluations. These findings on income and happiness have practical and theoretical significance at the individual, institutional and national levels. They point to a degree of happiness adaptation and that money influences happiness through the fulfilment of both needs and increasing material desires.

The actual study is an even more interesting read. With a sample size of nearly two million people, its results command attention. It worked like this: They studied three measures of correlation between “happiness” and “annual income” (as adjusted U.S. dollars, to allow cross-region comparison): degree of “life evaluation,” frequency of positive emotions, and frequency of negative emotions.

Graph from research published in Nature Human Behavior showing life satisfaction maxes out and begins to decline around $80,000 to $100,000 adjusted dollars globally, with some variation by region.No one was ever asked if they were happy or how happy they are. But instead were asked questions, in the first place, about their overall feeling about their lives in a generic way, and in the second place, about the kind of emotions they had predominately experienced the previous day. The former measure is effective because it avoids disparities in how people classify or define the word “happiness” or “happy.” And the latter measure is effective because random factors (like, say, having just lost a loved one the week before) get randomized in such large samples, to produce a measure of how frequently people at various income levels experience certain emotions (like, say, how often people at a certain income have to deal with grief over a lost loved one; and every other possible thing that impacts emotional state).

Life evaluation: participants were asked “to imagine a ladder with steps labelled 0 [to] 10, where 0 represents the ‘worst possible life’ and 10 is the ‘best possible life’ [and to] indicate at which step of the latter they personally stand at the present time.” Note that’s an 11 point scale (because of the inclusion of a possible 0).

Affective well-being: subjects were asked “whether they had experienced an emotional state for much of the day yesterday.” For the positive affect measure (positive emotions), “the emotional states [measured] were happiness, enjoyment and smiling/laughter.” For the negative affect measure (negative emotions), “the emotional states [measured] were stress, worry and sadness.”

Graph from research published in Nature Human Behavior showing emotional quality of life maxes out and begins to decline between $60,000 and $90,000 adjusted dollars globally, with some variation by region.With this approach, they found what all previous studies found (including the one Shermer falsely claimed had disconfirmed it): that once annual income hits a certain point, there are no significant gains in happiness after that. In other words, more money, is no use to us. Not as far as living a life worth living. In fact, this study found that sometimes, more money after that point actually decreases life satisfaction! Called “satiation,” the income level where this occurs did vary by country and region (and a little bit by education and gender: e.g., see the graph at the top of this article), but it actually remains fairly close to a universal standard, when controlling for achievability (i.e. when comparing regions where the same level of life satisfaction is reached on average at satiation; vs. regions where it can’t be, maybe owing to the region sucking too much to make such levels of happiness possible).

In general, averaged globally, “the satiation point for life evaluation occurred at approximately $95,000, at roughly 7.58” and “for positive emotions, satiation occurred at a lower level of income ($60,000), as did [the reduction in] negative emotions ($75,000).” Peak “positive emotion” days averaged at above 80% and “negative emotion free days” at around 75% (vs. a bottoming-out in poverty of around 60% and 65%, respectively). And “for all three measures…there were no appreciable increases in [subjective well-being] after these incomes.” In fact, “after satiation had been reached” for the life-satisfaction measure, “further increases in income were associated with slight decrements” to subjective well-being (which they called ‘turning points’, where increases started to reduce life satisfaction). This was even observed for the emotion measures, although not significantly (except for certain regions or conditions, e.g. incomes above satiation led to worse average emotional states in Latin America and Eastern Europe, and globally for people who had not attained the equivalent of a high school graduation).

Update: Note that all the numbers I supply in this article are for single individuals. For families, “households with more people,” the study found you have to “multiply the satiation estimate by the square root of the household size,” so “a household with four members would have a satiation point two times higher than the estimates reported here.” And for a couple with no children, that multiplier is roughly 1.41. So joint income for a couple will hit satiation at $141,000 when individuals hit it at $100,000; and a family of four in that same circumstance, hits it at $200,000. So generally still always low six figures.

Variations Were Relatively Minor

Even when we look at the variations, they don’t significantly change that general picture.

Higher satiation points on life-evaluation spanned $100,000 (Western Europe & Scandinavia) to $125,000 (Australia & New Zealand), and no higher, for example. This condition existed basically in wealthy nations (e.g. in North America, it was $105,000), where getting by—indeed, getting a lot of things—is more expensive. But a range of $95,000 to $125,000 worldwide is not that substantive a difference. Pretty much everywhere, you max out your life satisfaction as soon as you hit a six figure income. After that, you gain nothing. There was a different cluster of regions where the satiation point for life-evaluation was a lot lower, ranging from $35,000 (Latin America & the Caribbean) to $70,000 (Southeast Asia), with regions in that cluster including Eastern Europe and Africa. However, these regions also experience a lower maximum life satisfaction. In other words, they can’t even achieve the levels of happiness people in other regions can (and more people fail to achieve even the maximum that’s locally available); consequently, those who can get there at all, max out on what they can achieve, earlier. Those regions also tend to have lower costs of living, which may also be a factor.

For example, “Latin America/the Caribbean satiated at one of the lowest points” in their sample (satiation at $35,000, with an average life evaluation score of 7.57); likewise Southeast Asia ($70,000, at 6.84). Whereas “Northern America ($105,000) and Western Europe/Scandinavia ($100,000) satiated at much higher incomes, but also with significantly higher levels of evaluation (7.98 and 7.75, respectively).” Still, these differences might not seem that great in some cases. Even accounting for these differences, Latin America and the Caribbean seem to be much happier places in general, for those who can obtain the optimal income level (which does not mean the majority of the people there do). There may be cultural or environmental factors worth studying there.

Indeed, you should familiarize yourself with the summary report of Esteban Ortiz-Ospina and Max Roser, “Happiness and Life Satisfaction” (2017 ed.) at OurWorldInData.org. As one of their referenced reports notes:

Latin Americans report high happiness levels. Positive-affect scores are substantially high both in comparison to other countries in the world and to what income levels in the region would predict. Latin Americans’ evaluation of life is also above what income levels would predict. It is clear that there is more to life than income and that there is something to learn from the Latin American case about the drivers of happiness.

The average life evaluation score across that region is around 6 (vs. a little above 7 in the U.S.), though it is of course higher in some countries and lower in others (the highest: 7.14 in Costa Rica; the lowest: 4.93 in the Dominican Republic). This despite much lower incomes and other troubles in those regions. The disparity researchers credit to “the abundance of family warmth and other supportive social relationships frequently sidelined in favor of an emphasis on income.” In other words, “happiness in Latin America has social foundations.” Which is worth studying. That needn’t mean traditional family networks, however; created families, of built friendship networks, do the same thing, as do other forms of social community involvement, as I’ve noted before in addressing attempts to claim religion makes people happy, when in fact it’s just social networks that do (see Atheism Doesn’t Suck; also relevant are my observations in Poly Family, Poly World).

Similarly, variations by gender or education level were not that great. The only major outlier were people deprived of a high school diploma or equivalent, who experienced significantly lower maximum life satisfaction on all measures (life eval and emotionality), regardless of income, proving the importance of a secondary school education to human happiness. That’s not surprising, though. Similarly, college education produces a bump in achievable levels of life satisfaction as well. But the big new thing this study found (though hints of it had existed in prior studies) is that life satisfaction declines as income level rises above satiation. Being rich, basically, sucks. Not as much as being poor does. But you’ll be happier just stopping at a low six figure income. No matter where on earth you live. No matter your gender or education. The researchers observed the effect, but of course could only speculate at this point on its cause:

Theoretically, it is presumably not the higher incomes themselves that drive reductions in [subjective well-being], but the costs associated with them. High incomes are usually accompanied by high demands (time, workload, responsibility and so on) that might also limit opportunities for positive experiences (for example, leisure activities). Additional factors may play a role as well, such as an increase in materialistic values, additional material aspirations that may go unfulfilled, increased social comparisons, or other life changes in reaction to greater income (for example, more children or living in more expensive neighbourhoods).

Conclusion

The only credible core goal in life is personal life satisfaction (satisfaction with yourself, who you are and have become; and with your life, as lived and achieved). Any objectively true moral system (relative or universal, it makes no difference) follows necessarily from what is the ultimate goal in any prospective moral agent’s life (as I’ve demonstrated formally in The End of Christianity; though I’ve briefed it many times on my blog, perhaps most succinctly in my amusing debate with Ray Comfort last year). So it’s of great significance that income levels beyond six figures are useless to that goal. That’s an empirical fact. We should aim our life goals then to the realization of no higher an outcome; and we should not treat those who acquire more, as morally equal to those who don’t. What that translates to in particulars, would require more empirical evidence and argument to reliably know. But it’s a data point we need to start working with from now on.

In the area of the political, I would tentatively suggest the following appears to be the case: our progressive tax system should be steeper for the wealthy; and indeed, I’d argue, in the U.S. our standard deduction on income taxes should be maybe half our lowest average satiation income. Only people who earn more, should pay at all (of course they always still do pay, in sales and other taxes, regardless; but maybe those taxes shouldn’t even exist). The desire to attain happiness (and escape struggle) will continue motivating people to earn taxable incomes. And those well above satiation incomes literally don’t need their surplus, in the way those below satiation incomes do. Retaining it should therefore be treated as a privilege and not a right. The ultra-rich are hoarding, not sharing. Insofar as they can do external good with it (philanthropically and economically), I do not think it makes sense to tax all of it away—most of all to avoid over-centralization of power by having governments do all the hoarding instead, which is no better an outcome; and to remain competitive with other countries; among other reasons. But I suspect we could be retasking half of beyond-satiation surpluses to national welfare, security, research, and infrastructure, without folly. As many other nations do. (Note this does not mean taxing income at 50%, but taxing after-satiation income at 50%; the rest of one’s income would be taxed progressively the same way as ever, if at all.)

Things like that can’t be decided by a single datum like the empirical fact of satiation income. But that datum does have to be counted.

26 comments

  1. Jonathan April 7, 2018, 10:24 pm

    It is rather striking to me that the satiation point would be only around $95,000 in annual income, and this really sets off extremely loud skeptic alarm bells. I know that the type of life you can live with $95,000 is considerably different than the life you can live with $200,000 which is in turn quite a bit different than the life you can live with $500,000, which in turn is a lot different from once you are earning megamillions and have more money than you could ever need even if you were to live for centuries.

    It sounds like the study is attempting to measure both emotions experienced throughout the day and how good you think your life is compared to the ideal life. The first measure is at least somewhat objectively quantifiable in principle, but the second measure strikes me as extremely subjective.

    It does not at all seem surprising that a quantification of emotions experienced throughout the day might reach a maximum at a relatively low income, as whether or not you earn a lot of money you still have to go through most of the normal things in life like dealing with other people, doing chores, getting sick, not getting enough sleep, paying bills even if you can afford them easily, driving to work in traffic, flying on an airplane, etc.

    However it seems unrealistic to me that there would be a satiation point in terms of how good your life is compared to the ideal life, or if there is that it would be that low. For starters, the metric is too difficult to interpret in any meaningful way. What does a 7 even mean? How can a 7 from someone earning $40,000 in Costa Rica be considered qualitatively similar to a 7.6 from someone earning $150,000 in the US? Do they really have a similar quality of life relative to the ideal life, whatever it is that they think of as the ideal life? Do they even have the same idea of what the ideal life is? Also, while there is more to having an ideal life than money, surely everyone’s conception of the ideal life includes drastically more money $95,000 per year. It strikes me as really odd that this satiation point would exist because there is no way to get to a 10 on this scale without earning a lot more than $95,000 a year. I would be very curious to know how much money people were earning on average when they were rating their life as an 8, 9, or 10. What did the study say?

    Finally one other major point that this study did not address that higher levels of income extremely significantly impact is the amount of time during your life that you have to work. Surely someone who just earned $20 million this year is going to have an extremely different rest of their life than someone who is on track to earn $100,000 a year for the rest of their career.

    Taking all of this into consideration, I still think it is very unclear that if you want the best life possible you should just aim to earn around $100,000 a year and then declare victory.

    Reply
    1. It is rather striking to me that the satiation point would be only around $95,000 in annual income, and this really sets off extremely loud skeptic alarm bells. I know that the type of life you can live with $95,000 is considerably different than the life you can live with $200,000 which is in turn quite a bit different than the life you can live with $500,000, which in turn is a lot different from once you are earning megamillions and have more money than you could ever need even if you were to live for centuries.

      And what this found, and all previous studies that found the same thing (this is a multiply replicated result, with no study ever contradicting it), is simply that all those differences have no effect on human happiness. You will not be more satisfied (in fact, statistically you will be less so), and your emotional life will not improve.

      When our intuitions are contradicted by hard scientific data, our intuitions are just wrong. The science is correct. That’s why we invented empirical science in the first place: to correct all our false intuitions about the world. Our intuition is not reliable. If it were, we wouldn’t have ever needed the scientific method.

      It sounds like the study is attempting to measure both emotions experienced throughout the day and how good you think your life is compared to the ideal life. The first measure is at least somewhat objectively quantifiable in principle, but the second measure strikes me as extremely subjective.

      They are both subjective. But that’s all there is. It is logically impossible for there to be a measure of your happiness or contentment and satisfaction with life that isn’t subjective. Those emotions only exist subjectively. Cognitive desires only exist subjectively. It would make no sense for you to be miserable and have a scientist tell you “but the data says you are objectively happy.” That would be as nonsensical as saying “I am conscious right now” and a scientist telling you “but the data says you are unconscious.” What the data in this case actually shows is that “I will feel happier and more fulfilled if I make more money” is not only objectively false after about $100,000 annual income, but subjectively false as well. It is never in any sense true.

      And that’s just the fact of it.

      It does not at all seem surprising that a quantification of emotions experienced throughout the day might reach a maximum at a relatively low income, as whether or not you earn a lot of money you still have to go through most of the normal things in life like dealing with other people, doing chores, getting sick, not getting enough sleep, paying bills even if you can afford them easily, driving to work in traffic, flying on an airplane, etc.

      That’s the point. There turns out to be nothing more we really want out of life. We just aren’t any more satisfied with more. No matter how much we think we will be. We really just want that simple life, where needs are met, and we can actualize a rich life experience of self-actualization. Which evidently can be obtained with no more surplus than that.

      This is not “relatively low income,” BTW. The national average in the U.S. is half that; with an enormous percentage not even making a quarter of it (the disparity is even greater in other countries, e.g. in Latin America and Asia and Africa and much of the Middle East).

      However it seems unrealistic to me that there would be a satiation point in terms of how good your life is compared to the ideal life, or if there is that it would be that low. For starters, the metric is too difficult to interpret in any meaningful way. What does a 7 even mean? How can a 7 from someone earning $40,000 in Costa Rica be considered qualitatively similar to a 7.6 from someone earning $150,000 in the US?

      That doesn’t matter. Happy is happy. Content is content. What more do you need out of life? If you are satisfied with your life in Costa Rica, why should you care how your life would be in the United States?

      The most you could do here is try to argue that Costa Ricans are somehow by the millions all massively deluded and are actually living shitty lives and just think they aren’t because they “don’t know how good it could be” or “how good it is in the United States.” But that’s massively implausible. Costa Ricans could not be mass deluded about what life would be like in the U.S. I’ve actually been to Costa Rica. Life is pretty awesome there, despite not being ultra shiny and modern. And the locals have pretty good points about how, if anything, it’s the other way around: Americans are deluded about how good they have it; life is better in Costa Rica. Are they right? How would you find out? And how likely is it that you’ll find that anything significantly changes once you do find out?

      There is a sense in which people can be deluded about their satisfaction. For example, people in a cult (and many even mainstream Christians) often delude themselves into thinking their lives are great, because it would be deeply disturbing to them to admit their lives suck and that their religion is partly to blame for that. But for an entire geographic region to be mass deluded starts to beg belief. And at any rate, if you wish to tease out how much a person’s life-evaluation measure is delusional (and worse, that is so on a mass geographic scale), you have a lot of scientific and empirical work ahead of you. And it’s not likely to bear fruit. Because the affective measure lines up with the self-evaluation measure; and that is much harder to delusionally skew—much less to somehow skew it, en masse, on exactly the same curve. That’s why these studies combine the two measures.

      The bottom line is, “possibly, therefore probably” is a fallacy. So you are stuck with what the data show. You can’t invent facts to try and deny facts actually established. That’s what Christian apologetics does. It’s no more rational to do it in defense of any other ideology or belief system. “Costa Ricans are all deluded about how happy they are” is hardly more plausible than “Satan planted all the fossils.”

      Do they really have a similar quality of life relative to the ideal life, whatever it is that they think of as the ideal life? Do they even have the same idea of what the ideal life is?

      Obviously nearly everyone is already saying they do not. No one is scoring their lives a 10 (or at least not many are). Not many are even scoring it a 9. Thus, everyone agrees their lives could be better. The question is only how much, and is it achievable? The data show that once you are at satiation, the answer is always: not at all; and no.

      Other studies have looked at immigrants, to see how relocating by region affects this (see the link I gave for the other global survey report). For example, you are theorizing that when, say, a Costa Rican moves to the United States they will suddenly realize there is an even better life available, and thus change their measures of their past contentment and recalibrate their scale. There is no evidence that ever happens. Immigrants are often happier after moving, but not any more so than they already expected, nor more than natives already are; so they already correctly estimated how much better it would be in the other place, and when they got there, experienced exactly the improvement they expected (again, this is on average; individuals always of course vary in how accurate their expectations were). Which was no more satisfaction than natives in their new home already experience. So delusion clearly does not exist en masse (it may exist at individual levels that wash out in the averages, but that’s not statistically significant). Thus, for instance, an average person from the DR who has a below-5 life evaluation who gets to move to the United States, can on average achieve an above-7 life evaluation there. And they are on average not likely to have expected otherwise. Exactly as the data already predict.

      Also, while there is more to having an ideal life than money, surely everyone’s conception of the ideal life includes drastically more money $95,000 per year.

      And the data show they are wrong. It is never true (or at least not statistically so; there could be a few exceptions, few enough to have no statistical effect in the aggregate measures, but there are reasons to doubt that: humans simply don’t vary that much biologically to explain why some would be such outliers in this respect).

      You will simply never be happier. No matter how sure you are now that you will be. You just won’t be. Period.

      Your intuition is just wrong. As science tends to show for most human intuitions. After all, despite appearances, the sun doesn’t move. You are spinning at a thousand miles an hour. And contrary to common sense, there are upside-down people on the other side of the planet, where things fall up. And the speed of light is always the same in every direction no matter your own velocity. And water isn’t an element. And heat isn’t a fluid. And objects are not solid. And colors don’t exist in the world outside our mind’s simulation of it. And so on.

      It strikes me as really odd that this satiation point would exist because there is no way to get to a 10 on this scale without earning a lot more than $95,000 a year. I would be very curious to know how much money people were earning on average when they were rating their life as an 8, 9, or 10. What did the study say?

      You’d have to go into the raw data to find out. The report only gives the averages. But since wealthier people are so much fewer in number, we can be sure there must be fewer 10s (or 9s even) among them than among the poor, or not significantly more, because if there were a lot, it would bring up the average noticeably. For instance, if you are counting 100 people and their average score is 8, there cannot be very many 10s among them (unless there are a lot of 0s etc.). Because that would bring the average higher. And yet, the data actually show the average is brought down by being wealthier. Exactly the contrary effect you are imagining. So the number of 10s would actually have to be going down. Not up.

      I should note that we are probably really talking about 1s and 9s. There might be no possible way to get to 10 at all. This is another thing science has found, we have a cognitive bias against maxing scales. And it’s sad to say, but fact is, there might be fewer 1s than 9s owing to suicide eliminating the 1s from the measurement sample; so probably, the bottom rates are mostly 2s. At any rate, if self-eval were maxing at 9, we’d have cause for concern that we are just pegging the scale. Although that would still leave us in the same place: the improvement after that is simply not appreciable. There is therefore little reason to pursue it. Because humans can’t even measure their own happiness as appreciably greater; and that by definition means it isn’t (because happiness only exists subjectively; it has no objective reality that matters to human decision making).

      But we aren’t pegging the scale. Satiation average never reaches 9. And the affective measure scale is not subject to this problem, and corroborates the curves for life evaluation. Another reason they use both measures together. And again, post-satiation, life-eval scores drop. They don’t continue heading toward 9. They don’t increase significantly at all.

      Finally one other major point that this study did not address that higher levels of income extremely significantly impact is the amount of time during your life that you have to work. Surely someone who just earned $20 million this year is going to have an extremely different rest of their life than someone who is on track to earn $100,000 a year for the rest of their career.

      That is statistically included in the sample.

      This involved nearly two million people. A lot of the respondents are in retirement. So we are already measuring that. But there is a point here about financial planning, one that becomes less significant in first world nations other than the U.S. (due to vastly superior social security).

      So we have to look at that economically: e.g. once you are at six figures (if you obtain it early enough), can you maintain that for life? Not just because of social security, but because that six figures includes investment in retirement savings (likewise, medical care). That involves different data; but it looks to me like the answer is yes.

      There is another problem of making yourself miserable by exceeding satiation to build a retirement fund so you can live at satiation in retirement. You are basically deleting massive amounts of happiness, for a period of time you aren’t even guaranteed to have, and won’t be able to enjoy nearly as long (and probably not as much). But that would be a different study.

      Taking all of this into consideration, I still think it is very unclear that if you want the best life possible you should just aim to earn around $100,000 a year and then declare victory.

      Why do you frame life as “victory”? That attitude alone is probably negatively conducive to your own happiness. Life is to be lived. Not won.

      You are describing a rat race. We are describing a satisfying life.

      The data show, you simply won’t gain more in happiness if you “keep going” on the income scale. That matters if, for example, you need to sacrifice happiness to get those gains (e.g. working more hours, enduring more stress, doing things you hate or that don’t satisfy you but merely “make money,” or even engaging in an immoral life of exploiting masses of people, etc.). It simply is not worth it. You won’t get anything back for the effort and sacrifice. In other words, it’s a problem of diminishing returns.

      Certainly, if you fall ass-backwards into that increased income, if it requires no sacrifice or more hours or stress, etc., then there’s no need to turn it down (though you will never need it, so you will still have no position to complain if it’s taxed at a reasonably high rate). But that outcome is simply not available to most people. So it can’t be a goal. If you have it as a goal, then you are simply describing a rat race again (sacrificing happiness to play a lottery of social repositioning). Which the data show is just kicking against the goad. It’s much more efficient and reliable to shoot for the $100,000 and maintain it and make the most of that. Because you just won’t get much more out of doing more. Nothing that matters to your own life satisfaction. And nothing else really matters than that.

      Reply
    2. Simon April 8, 2018, 2:47 pm

      Richard already replied thoroughly but I wanted to add that I don’t think you are thinking clearly about what it means to score a ten. Take a moment to think about the occasions where one might score their happiness in this way . There are a few occasions that come to mind, marrying the love of your life, the birth of your first child, the first time tasting Biscoff spread.

      The difference between earning 100k and 500k hardly change your opportunity to experience those heights. You can bet earning 15K does. For example the worry of making sure you have enough to provide for your new family and give them the best life.

      Reply
    3. Peter April 9, 2018, 6:02 pm

      I agree with Jonathan. The problem with putting a figure like annual income is that it doesn’t account for purchasing power. A dollar is not a dollar everywhere on earth. Depends on the country and even the location within a country, a dollar can count for more or for less depending on the local economy and market.

      I wonder if those researchers focused on interviewing some rural farmers or some hillbillies in redneckistan. Did they ever visit an expensive metropolitan city? Come to Toronto and tell people all they need to live happily is $100k, and they will laugh at you. Income tax will already take 25% of that money. Then you have one of the hottest housing markets in the continent. THe average condo is half a mil, and a detached house is at least 1.4 mil. On top of that, add car insurance, car payments, 13% tax on all purchased goods and services, and all that adds up. Now try to get married and raise kids on top of all this, and see how far that $100k gets you. Stay a bachelor, or make sure you get married to someone who also makes that $100k a year if you actually expect to balance your bills and not slave away spending the rest of your life paying interest on loans and borrowed money.

      Reply
      1. The problem with putting a figure like annual income is that it doesn’t account for purchasing power.

        The study is all in adjusted dollars. So they already factored that in.

        The only thing they didn’t do was sub-regional variation (e.g. American rural vs. American urban), but the data for even more extreme variations cross-regionally, show us the effect won’t be that great. It could also, though, be accounted for in taxation anyway. The same way we deduct per diem specific to each city in the U.S. on business taxes, satiation rate could reflect local satiation average. Unless we want to encourage re-populating small towns and relieving population strain in cities; in which case satiation disparity would reward people who bring their economy back to rural America. They would essentially get significant tax breaks (though not enormous ones; as the disparity won’t be so large, as the study shows even with the more extreme cases measured; still, it would be an incentive to leave a city and bring dollars back into rural America where it is sorely needed…this is essentially what has happened in every other first world country, and why their towns are thriving, and ours are rotting).

        Also, see my note above about families and how those are measured. That answers your concern there as well. Satiation for a family of two (e.g. a married couple) in a $100,000 satiation-per-individual area, typically occurs at roughly $141,000. A family of four, $200,000. Etc.

        The people who have the hardest time are not earning at satiation, remember. We are only discussing people who earn six figures (or close to, depending on area). And we are only talking about the tax rate on the surplus, not the whole amount. Our progressive tax bracket system does not apply to whole incomes even now. If you are in today’s 36% bracket, that is not 36% of your whole income; it’s only 36% of the proportion of your income that is in that bracket. For example, if today the 36% rate triggers at $150,000 annual income and you earn $150,001, you only pay 36% on a single dollar. So, 36 cents. The remaining income is taxed at whatever rate applies to it (which, like now, may be several rates for different parts of the income, including a zero rate for deducted income: because that’s also all after deductions, including the minimum standard deduction: that income is taxed at zero).

        Reply
        1. Peter April 11, 2018, 9:39 pm

          Perhaps something is being lost in translation here. I have no idea how american taxation works. Here in ontario taxes are a lot higher and your proposal below is actually less than what we already pay. In fact, your proposal actually ends up lowering taxes, which is probably gonna make it popular with the conservative rightist demographic. So for a 100k income, the total federal and provincial tax is 25% and your net income would be only 75k. For someone making 150k the tax rate climbs to almost 32% and so your net after tax would be only 100k. On top of that there is a 13% sales tax on just about any gooods or services you buy (even used cars!). And if you live in the golden horseshoe you can add the highest car insurance premiums in the country and on top of that one of the most expensive inflated real estate market in the entire continent.

          That’s why I find the idea that eternal bliss happens as soon as you hit 6 figures to be rather absurd. Maybe for some parts of the US. Definitely not here. I doubt the satiation point here would be radically different than your figure, but I suspect it would be at least 1.5 to 2 times as big.

        2. Which means Ontario-Canada doesn’t really have a smart tax system. It should go easier on the poor than that, by using a correctly progressive tax, and not rely on sales tax at all. These are different issues than my article deals with. My proposal is simply to tax surplus after satiation at 50%. Not the whole income. My own argument would argue against the tax system you are under.

          But also, please stop with the hyperbole. No one is talking about “eternal bliss.” And 1.5 to 2 times is not a significant difference. Low six figures is low six figures. And for non-family individuals the data son’t show what you “think.” When what you “think” contradicts the evidence, we go with the evidence. As for families, as I already noted, 1.5 to 2 times is what the data show. So you are actually just agreeing with me.

  2. Pete April 8, 2018, 12:19 am

    Thats a stupid proposal. What about my freedom to donate my money to whatever charitable cause i wish? Why should the government and the rest of society infringe on that freedom by confiscating that money for their own purpose? If that’s the case then as soon as I reach that magical 6 figure mark I will stay at home and watch tv. I wont work my ass off so that others can use my money for their pet causes.

    Reply
    1. James April 8, 2018, 10:00 am

      I must agree with Pete. The misunderstandings of, and ignorance regarding, economics are painful. However, it is certainly interesting to hear that income satiation occurs so early. I have some bones to pick with that study, but my complaints aside, I’d have imagined that they’d have found that satiation would occur somewhere not far beyond $250,000.

      Reply
    2. What about my freedom to donate my money to whatever charitable cause i wish?

      There’s no evidence you should have that freedom, at least wholly unchecked. There is no rational argument for it. You don’t get anything out of it. It won’t improve your life or make you happier by any known measure. So why would you even want it?

      But note my political hypothesis was not “take it all,” but “take half” (and of only the surplus). So my proposal in no way takes away your freedom to donate money to anything you want.

      The reason we need to tax income is that all data in all other studies show: you simply won’t give your money to charity. In the aggregate, rich people don’t give to charity beyond trivially. In fact, studies show, the poor donate more to charity as a percentage of income or time than the rich. But even then the percentages are low single digits (2%, 3%, 5%). You simply can’t run a modern civilization on 2%. Much less expect it to be donated voluntarily. That’s the difference between third world and first world countries: we realized rich people’s don’t pay for the civilization they depend on for their wealth; so we taxed them, and made them pay for it. All evidence shows that works. And that nothing else does.

      If you want to live in a third world country where you don’t have to pay taxes, there are plenty to choose from. Move there.

      But if you want to live in a modern civilization, you have to pay for it.

      Those are your options.

      Reply
      1. Peter April 9, 2018, 5:37 pm

        Since we don’t live in a totalitarian country, the default is to maximize freedom and not limit it unless it begins to harm others. Also, how the hell would you know what makes me happier or improves my life? You dont.

        You also confuse things. I’m not anti tax. I think taxes are a necessary part of modern society and progressive taxation is a good idea. What I take issue with is your claim that income beyond an arbitrary limit is a privilege and not a right. That pretty much opens the door to banning high income, or for the government to confiscate most, if not all, income above that limit. people dont go to work because they love it. they do it for money. No one will go to work if they aren’t getting paid anymore. Ontario already tried this a long while back with family doctors. They had a cap which was actually rather high, around $400k a year or so I think. Yet what happened was that the popular doctors who earned that much ended up only working till they reached the pay cap. Then they shut down the office and went to play golf until the new year came in and reset their pay calendar.

        Reply
        1. Since we don’t live in a totalitarian country, the default is to maximize freedom and not limit it unless it begins to harm others.

          The options are not “totalitarian society” or “no taxes.” Nor “totalitarian society” vs. “all net income above $150,000 shall be taxed at fifty percent.” Your fallacy of black and white reasoning indicates you are not behaving rationally here. See to that. It’s dangerous.

          Also, how the hell would you know what makes me happier or improves my life? You dont.

          I personally don’t. But the data simply show, you are very unlikely to improve your satisfaction with life with more. It thus becomes a question of the balance of whether you are taking too much from the community rather than giving back your share to sustain the benefits you reap from it. The data give us a reliable basis for knowing where that point is. The proposed personal advice is don’t get obsessed with a rat race; you aren’t going to really be happier, but more likely less so. The proposed political advice is that it won’t substantially hurt you to take half your surplus beyond, say, $150,000, to pay for the advanced society you depend on to make that money in the first place. The harm done will be trivial. The benefits gained are enormous.

          Your remaining point about why it would be stupid to tax at 100% is entirely correct. That’s why I didn’t propose it. At 50%, you still always increase your income. And that only on income above, say, $150,000. For example, you could have a rate of 0% on half satiation, so the first $75,000 you pay nothing, the next $75,000 you might pay, say, 33%, so at $150,000 your total income tax annually is $25,000, leaving you $125,000. So if you earn $300,000, then your total tax is $35k + $75k = $110,000, so you take home $190,000, $65,000 more than you take home when you were earning half of $300,000, which is 150% of a whole other average human being’s income on top of your satiation income; that’s how our progressive tax system works today. It’s how it would continue to work.

          That’s why the options aren’t “totalitarianism” or my proposal. There is nothing totalitarian or at all significantly incentive-or-freedom impairing about my proposal, or indeed anything measurably harmful about it at all.

          (Note I didn’t include discussion of one factor which I will in an update when I return from Chicago: where satiation falls for joint family income. The data show it’s proportional to a square root of family size. So, for a family of four, for example, where satiation for a single person is $100,000, satiation for the family typically occurs at $200,000. Still low six figures. But of course we could account for that in the tax system, too, same way as we already do.)

      2. “There’s no evidence you should have that freedom, at least wholly unchecked. There is no rational argument for it. You don’t get anything out of it. It won’t improve your life or make you happier by any known measure. So why would you even want it?”

        How do you know what any particular person gets out of something? You’re arguing from the general to the particular instantiation. In other words, this is what the average is, therefore it should apply to you also.

        Reply
        1. How do you know what any particular person gets out of something? You’re arguing from the general to the particular instantiation. In other words, this is what the average is, therefore it should apply to you also.

          What you mean to argue is, “yes, most people this is true of, and thus will be true of, but maybe there are some exceptions, for whom they could never be satisfied unless they made, say, a million dollars a year.”

          You could say, that these weird outliers (and for the averages to be where they are, arithmetically, they would indeed have to be rare), should get “special exceptions” from the remainder of the polity, and behave differently than the rest of us (it’s at least logically possible that’s true; it would fall under the objective relativism option I lay out in my chapter on moral facts in The End of Christianity).

          But you’d first need to show that’s true (so, you have some empirical work ahead of you). It’s certainly biologically improbable that humans vary so extremely on such a dimension, particularly as “wealth” did not exist when we evolved. So why should a person require something to be satisfied, that never existed when their own satisfaction measures were constructed? And if it’s just a construct, e.g. something learned, this only argues we should stop constructing and teaching that, because it is to no one’s advantage to be like that. And claiming the contrary, is again a claim requiring evidence, leaving yet more empirical work ahead of you.

          Meanwhile, from what I am observing, in the data and the world and from the science of psychology: if anyone is such a wealth addict that they can’t be satisfied at a low six figure income, they sooner need therapy, than coddling.

      1. RC: “The only credible core goal in life is personal life satisfaction (satisfaction with yourself, who you are and have become; and with your life, as lived and achieved).”

        Yes, but the question is what any particular individual finds satisfying over the short, medium or long terms. It could be argued that meaning is also a “credible core goal in life.” Alternatively, you could include it in “life satisfaction” along with other contributors. Many people think that struggle and challenge are of key importance in their life. They don’t necessarily measure their life satisfaction or degree of happiness by their moods on a minute-to-minute basis, much less their income and wealth.

        Beyond this, every person will have a different definition of personal life satisfaction, whether it includes meaningfulness or anything else for that matter. If we’ve learned anything from psychology over the last 150 years, it’s that people tend to differ along many dimensions, sometimes with a huge range of variation. Some people practise poly-amory, while others practise monogamy. Neither is right, so long as no one is being harmed or is being coerced. I only read your summary of the article, but I don’t get the impression the figures they include report the distribution of responses. It is crucial to know how narrow or wide the set of individual responses is. Assuming the distributions of responses are Gaussian, the standard deviation could be large or small. So, there may be many people either far above or far below the mean/median/mode. If it’s like most other traits, behaviours, and values, there must be a significant spread around that.

        One of the key problems in society, especially large communities, is to find a way to live together without being at each other’s throats. Trying to define a level of “life satisfaction,” however detailed, based on scientific studies or moral injunctions, whether from religion or any other system of hypothetical imperatives, can and probably will lead to more dissatisfaction and unhappiness than letting people figure out for themselves what these are. There is too much history of social engineering evolving into dictatorship and state-enforced suppression of difference.

        RC: “Any objectively true moral system (relative or universal, it makes no difference) follows necessarily from what is the ultimate goal in any prospective moral agent’s life (as I’ve demonstrated formally in The End of Christianity; though I’ve briefed it many times on my blog, perhaps most succinctly in my amusing debate with Ray Comfort last year). So it’s of great significance that income levels beyond six figures are useless to that goal. That’s an empirical fact. We should aim our life goals then to the realization of no higher an outcome; and we should not treat those who acquire more, as morally equal to those who don’t. What that translates to in particulars, would require more empirical evidence and argument to reliably know. But it’s a data point we need to start working with from now on.”

        That’s exactly the point! “We should not treat those who acquire more, as morally equal to those who don’t.” Says who? You’re drawing an unwarranted conclusion from the study. Maybe they’re actually morally “better.” Or maybe using such language is emotionalizing what is essentially a personal choice. People make choices in life. Some choose to live a simple life with little challenge and are quite happy to earn a wage that is commensurate with low contribution and performance. Others want more. Presumably, they’re willing to pay the price in the short, medium or long term to achieve it. It doesn’t necessarily follow that all will experience lower levels of life satisfaction and negative moods. As we don’t know what the spread is around the average reported levels of satisfaction and positive/negative moods, it’s hard to tell whether any particular individual is feeling better or worse with their circumstances. Any attempt to impose “average” interpretations on individuals is dictatorial and repressive.

        Furthermore, I’ve seen studies where “life satisfaction” and “happiness” evolves over the life course. I’m not mistaken, younger adults tend to have lower life satisfaction than older adults. Also, life satisfaction, happiness and mood tend to bottom out when people are raising children. Raising a family is no picnic. It can bring joy, usually for short periods, but it can also cause misery, worry, anxiety, stress and fear. What about that? Should we ban child rearing on the grounds that it makes people unhappy?

        A final factor is that people tend to weight negative experiences and outcomes approximately twice as much as positive ones. Negative emotions last longer and are felt more bitterly than positive ones. I don’t know how that fits into the whole discussion, but surely it isn’t irrelevant.

        RC: “In the area of the political, I would tentatively suggest the following appears to be the case: our progressive tax system should be steeper for the wealthy; and indeed, I’d argue, in the U.S. our standard deduction on income taxes should be maybe half our lowest average satiation income. Only people who earn more, should pay at all (of course they always still do pay, in sales and other taxes, regardless; but maybe those taxes shouldn’t even exist). The desire to attain happiness (and escape struggle) will continue motivating people to earn taxable incomes. And those well above satiation incomes literally don’t need their surplus, in the way those below satiation incomes do. Retaining it should therefore be treated as a privilege and not a right. The ultra-rich are hoarding, not sharing. Insofar as they can do external good with it (philanthropically and economically), I do not think it makes sense to tax all of it away—most of all to avoid over-centralization of power by having governments do all the hoarding instead, which is no better an outcome; and to remain competitive with other countries; among other reasons. But I suspect we could be retasking half of beyond-satiation surpluses to national welfare, security, research, and infrastructure, without folly. As many other nations do. (Note this does not mean taxing income at 50%, but taxing after-satiation income at 50%; the rest of one’s income would be taxed progressively the same way as ever, if at all.)”

        The ultra-rich aren’t hoarding wealth, unless they’re keeping it in a sock under their mattresses. That demonstrates a poor grasp of economics on your part. All accumulated wealth is the result of consuming less than one needs to in order to accumulate it for investment purposes. What’s more, taxing the “excess” wealth and income away would only result in giving even more power to the state and its political and bureaucratic masters so they can spend it in ways they find appealing, rather than those of the people who created the income and wealth in the first place. Once again, history demonstrates that governments are the least efficient and effective means of allocating scarce resources, which means they will be uneconomically allocated. If not economically, then the only other options are through political lobbying and favouritism.

        Ultimately, I think this kind of “soak the rich” attitude is based on envy and resentment. We need to find ways of all living together in society, while ensuring that there is the possibility of free choice and the exercise of free will. Arbitrarily defining a level of income as “enough” is the wrong way to go about that. There may be a rationale for progressive taxation, but trying to base it on a dubious psychological and emotional basis is not it.

        Reply
        1. Yes, but the question is what any particular individual finds satisfying over the short, medium or long terms. It could be argued that meaning is also a “credible core goal in life.” Alternatively, you could include it in “life satisfaction” along with other contributors. Many people think that struggle and challenge are of key importance in their life. They don’t necessarily measure their life satisfaction or degree of happiness by their moods on a minute-to-minute basis, much less their income and wealth.

          That’s all already included in the data. Everyone of every status and attitude (regarding what satisfies them) is already being counted. So we already know the answer here: after about six figures, nothing changes. Even for people who “need challenge” and “seek meaning” and are “in retirement” and “just starting out” and on and on. Indeed, they found the variation after the average satiation point was not even observable logarithmically.

          Beyond this, every person will have a different definition of personal life satisfaction, whether it includes meaningfulness or anything else for that matter.

          The data already account for that. The differences found, were small. Even with extreme differences in circumstance. Hence the conclusion.

          (There cannot be “many people” significantly above the mean, BTW—if you know how averages work, getting a lot of people who more than double the mean income, would draw the average up, and be so unusual—violating the bell curve theorem—that the study would remark upon it; the more so in this study, where the standard deviations just don’t make what you are saying possible, and instead actually show the higher incomes reducing satisfaction. There just aren’t many at all who vary much at all from the mean, once you hit low six figures. And if this disturbs you, you can request the raw data from the researchers and see if you can try and find these “many” people you are imagining. I’d agree they’d be worth studying.)

          There is too much history of social engineering evolving into dictatorship and state-enforced suppression of difference.

          No one is talking about social engineering. To the contrary, we are looking at empirical evidence of how much wealth a person needs to achieve satiation without social engineering (i.e. the amount they need to control all by themselves, and make their own decisions with).

          Maybe they’re actually morally “better.”

          I didn’t mean better or worse persons; I meant, they require and deserve no difference in treatment. Surely you don’t mean to say a special system of justice should treat rich people differently than poor people because the rich are “better” than the poor? I mean, if you want to go back to the Middle Ages, or join the ranks of King Goerge’s men chafing at “all men are created equal” as a concept to construct our society on, we have a much bigger dispute between us than the implications of this study.

          Some choose to live a simple life with little challenge and are quite happy to earn a wage that is commensurate with low contribution and performance. Others want more.

          And the data show, no one really needs more. Once they hit the low six figures. In fact, the tendency is to need less (as further wealth, tends to reduce satisfaction; and no statistically significant increases are observed even on a logarithm curve).

          The variances, just aren’t that large. You seem to be imagining something that’s arithmetically impossible. You might want to grasp the logic of bell curves and standard deviations; and then look at how the satiation curve drops after six figures—which contradicts any claim of an abundance of people only happy at higher incomes; to the contrary, they tend to be less happy at higher incomes. There just aren’t any significant number of people happier at higher incomes, than at lower ones.

          And then, if still you are nonplussed, you can request the raw data and, again, try to find in it any of these mythical unicorns you are defending as somehow morally special people who deserve to be treated differently than the rest of us. Though there would remain a lot of work yet to do even if you found them (e.g. will these millionaires with unusually high satisfactions that you are looking for actually drop their satisfaction at lower incomes? and for rational reasons?). And, I should note, it would remain highly statistically improbable you are one of them.

          Furthermore, I’ve seen studies where “life satisfaction” and “happiness” evolves over the life course. I’m not mistaken, younger adults tend to have lower life satisfaction than older adults.

          They controlled for such factors. No statistically significant differences from the general results were observed. Insofar as age affects satisfaction, it has no apparent effect on the satiation-to-income correlation. So more money doesn’t help young people, any more than old people.

          Any attempt to impose “average” interpretations on individuals is dictatorial and repressive.

          No, it isn’t. Some such attempts to do things like that might do so, but which attempts do and when, is an empirical question. You can’t just declare “everyone is different, therefore there should be no laws.” As if for example, we should have different speed limits on highways according to individual tested driving skill, or some such inefficient nonsense. Which would be dictatorial and repressive—for attempting exactly the opposite. It’s far easier on everyone to have the same limits for everyone, and not get insane over differences of vehicle handling and driver skill and have a zillion different speed limits on a single stretch of road. Because, in point of fact, the differences, really aren’t that large. Certainly not large enough to justify such a much more oppressive and confusing and costly system of speed limits.

          And here the same is even more the case. No, there just isn’t any evidence in the data that anyone differs enough that they will be significantly impacted by my recommendation. Full stop. That’s the empirical fact of the matter. So my recommendation is not “dictatorial and repressive.” No more than any other tax law conceivable. And my personal recommendation remains valid: you are extremely statistically unlikely to be an extreme outlier; you are far more likely to be just like the vast majority of everyone else. So you should keep that in mind in your own life plans for satisfaction and belonging.

          Should we ban child rearing on the grounds that it makes people unhappy?

          No one is talking about banning anything, or meddling in any way at all.

          That this is your panicked response to what I suggested, indicates you are reacting emotionally and not rationally. See to that.

          To the contrary, we are talking about letting people do whatever they want. All we are talking about is how much income they need to do it—no matter what it is they choose to do. Because every possible choice, is represented in the data. They counted people with children, and without, for instance. They are all included. The results are the same (except of course as I noted, children slightly increase the income required for satiation, but trivially compared to seven figure incomes and above). Moreover, my proposal let’s people have higher incomes. Millionaires will thus still exist. Just half the surplus goes to the community, not all of it. So there is no “banning” anything even in that sense. You can calm down.

          A final factor is that people tend to weight negative experiences and outcomes approximately twice as much as positive ones.

          Not relevant to the study or its results or my application of them.

          You seem “sure” it’s relevant. Explain how. And why you think that. Because it sounds like you are rationalizing, grasping at straws, like a Christian apologist, or Luke Skywalker confronted with Darth Vader exclaiming he’s your father.

          The ultra-rich aren’t hoarding wealth, unless they’re keeping it in a sock under their mattresses.

          That’s not what hoarding means.

          We don’t hoard food in a catastrophe only to stuff it under a mattress and not eat it.

          Hoarding is not a threat to the community because the hoarder doesn’t use it. Hoarding is a threat to the community because the hoarder is not letting others use it who need it.

          For every ten million dollar yacht, there could be hundreds of far better paid employees in the yacht-owner’s business. For every billion dollars burned on useless derivatives that tank whole markets and ruin the lives of millions of working class citizens who don’t even know what a derivative is, there could be thousands more on Medicare.

          Wealth directed at business is not taxed (if a company takes profits and invests them back into the business, it’s fully deducted). Wealth taken home by individuals, is taxed. And should be in ways that keep income disparity in check, without significantly affecting their life satisfaction. Because all studies in economics and history and political science show, increasing income disparity beyond a certain point is never good. And this study shows, taxing half the surplus, will have no significant effect on anyone’s satisfaction.

          All accumulated wealth is the result of consuming less than one needs to in order to accumulate it for investment purposes.

          “Everyone spends their money” is true. It is therefore a useless observation.

          The question is: how much money do they really have to spend to be happy. That is wholly unaffected by such minutiae as what they spend it on, which we are unconcerned with. They can spend it on anything; all people were included in the study, regardless of how they spent their incomes. It is affected, however, by whether they have it to spend. Hence the question is: at what point, do they not need more money to spend, to be as happy as they are likely ever to be. And we know the answer now.

          What’s more, taxing the “excess” wealth and income away would only result in giving even more power to the state

          Not relevant to the present issue. Indeed we need to maintain a balance between giving and withholding state power. The state needs more power to serve the whole purpose for which it exists. But it should not have too much power lest that result in abuses that take away from the purpose it serves. But that is all a question of governance: how we direct the revenue of the state. It is not a function of how much revenue the state has. That’s a completely different question than what we are addressing here.

          What we know as an empirical fact is that other Western nations, who are more successful than us on every measure of life satisfaction and social dysfunction, are investing more money in their state operations than we are, and doing so more smartly than we are. So it cannot be argued that my proposal will give the state “too much money” or leave the people with “too little money.” So your objection here simply isn’t rational.

          Your concerns about state power, are concerns about how to use money. Not about how much money is needed for it.

          Once again, history demonstrates that governments are the least efficient and effective means of allocating scarce resources, which means they will be uneconomically allocated.

          That’s actually not true. I know it’s a common myth. But it’s false.

          Most private operations fail. When you compare all operations, public and private, and include failures and successes, no differences obtain. Corruption, incompetence, and inefficiency are the same. The ability to fix corruption, incompetence, and inefficiency are the same.

          The solution to bad government is not the absence of government. The solution to bad government is better government. This has been proved countless times now. Absence of government produces the Third World. Improved government produces the First World.

          And again, this is simply a matter of how to govern. Not a matter of how much income a government has. Obviously governments doing better in revenue, tend to do better things than governments that aren’t doing so well in revenue. There is a reason the U.S. is the only First World nation on earth that doesn’t have free national health care for all its citizens—and yet spends more money on its health care, with poorer quality of results. We are less healthy. We have higher infant and maternal mortality rates. And so on. Even on measures when we aren’t the worst, we are nowhere near the best.

          This is the difference between paying for your society, and not paying for it. This is the difference between letting the rich hoard wealth, and making them pay their fair share of the society their wealth depends on.

          Ultimately, I think this kind of “soak the rich” attitude is based on envy and resentment.

          Half satiation surplus is not a soak. When you walk away with six or indeed still even seven or eight figures a year, you aren’t being soaked. Soaked is when we tax the middle class at rates that are higher than they need to pay their rent or mortgage. When taxes threaten your survival, or keep you trapped in valleys of low opportunity, you are being soaked. When taxes leave you fat and rich and content with life, you aren’t being soaked.

          We need to find ways of all living together in society, while ensuring that there is the possibility of free choice and the exercise of free will. Arbitrarily defining a level of income as “enough” is the wrong way to go about that. There may be a rationale for progressive taxation, but trying to base it on a dubious psychological and emotional basis is not it.

          To the contrary, it is the only valid measure to base it on. Even by your own reasoning. Just think this through. On what basis should we set how much tax burden we place on people other than what won’t significantly impact their life satisfaction yet will sufficiently fund a flourishing society they can enjoy the benefits of living in?

          Nothing in my proposal impairs free choice or free will. The rich keep half their income above satiation. They still have more opportunity than everyone else. Indeed, a person earning $500,000 taxes at 50% over $100,000, walks away with $300,000. They walk away with more money, indeed more than twice as much money, above $100,000 than everyone else on the planet earning less than $100,000. They have vast surplus still left over to burn on any frivolous thing they want. So stop bitching about free will. That’s a bullshit argument here.

          I am not doing anything “arbitrarily” here. Basing conclusions on vast bodies of evidence is exactly the opposite of being arbitrary. I am doing exactly what you want: taking into account what a good society costs, that won’t significantly impact anyone’s life satisfaction. Only, unlike you, I am doing this based on actual evidence, rather than armchair rationalizations and imagined facts that aren’t anywhere in evidence or aren’t even logically relevant to the question. I suggest you get on board with evidence-based reasoning. And drop the tactic of arguing from armchair fallacies and ideological assumptions. The world, and your own life, will be the better for it.

  3. Simon April 12, 2018, 1:18 pm

    Great discussion of an interesting study. I vaguely remember, in Sense and Goodness, that you argued for the possibility of sales taxes replacing income tax. It seems in the comments here you might now favour the reverse? (or my memory is wrong)/

    Reply
    1. Correct. I’ve completely reversed my position. My studies since have found that sales taxes disproportionately hurt the poor, and do no practical good compared to (and pose no greater evils than) a well-structured income tax (and indeed, I think personal income taxes should be higher, and business, i.e. corporate, income taxes lower, than the current American regime, another reversal of my position). I am likewise against property taxes now for similar reasons (although replacing them would be a structural challenge in the U.S. as we’ve become so inordinately dependent on them).

      Reply
      1. Simon April 12, 2018, 3:31 pm

        This is really interesting. I actually spent some time considering your proposal in the book and researching a little bit.

        Has your position changed at all, also, on the idea of governments owning and thus renting out the land that is specifically used for things like energy production as a way of generating income outside of taxation?

        Forgive me if I am misrepresenting its been a while since I have read it.

        Reply
        1. That’s still a viable option, yes. Governments would have to buy (not seize) the assets they manage to that end, and actually manage them to that end (i.e. to maximize revenues and thus optimize operations), as I explain in the book, but otherwise it works considerably (e.g. Alaska and Norway do that with oil, and even the American federal government does it in small respects it could scale up, e.g. in timber management and other land lease operations).

  4. Tyler Esch April 13, 2018, 9:05 am

    I’m curious as to how set you are on 50%. Do you see much flexibility in raising or lowering that percentage?

    Reply
    1. Of course. The actual percentage would have to be decided empirically (and over decades or even centuries, an honesty polity will assemble data on where the sweet spot is, as far as economic impact for example) and democratically (the body politic deciding what kind of world it wants to live in and what its members should pay for the benefits of living in it).

      Reply

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