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The happiness coefficient, education gaps, and Piketty’s prescription

In The Atlantic’s CityLab, Richard Florida makes a case for the correlation between happiness and equality by measuring states’ reported satisfaction levels alongside their respective Gini coefficients. He finds that in states with lower Gini Coefficients (and thus, lower levels of income inequality), residents are more likely to describe their home as either the best, or one of the best, places to live. It might be prudent, in other words, to head for Montana.


When it comes to school districts, however, New York City might prove a more attractive destination. The Washington Post‘s Emily Badger reports that the massive metropolis’ public school district spent more money on its nearly one million students during fiscal 2012 than any other large public school system in the country—and twice as much as Prince William County, just outside Washington D.C.

As Badger puts it: “When we think about the consequences of funding public education as we do in America — a system heavily reliant on local revenue that produces wide variation both across the country and within individual states — these numbers make plain the reality that where children live matters for how much we invest in them.”


Speaking of schools, in a research paper released Thursday, MIT economist David Autor suggests that it’s college—and not the one percent—that might be to blame for the astronomical rise of the super rich against everyone else. According to Autor’s calculations, the growing pay differential between degree holders and non-degree holders outranks the gains achieved by top earners in comparison with the rest of the population, courtesy of labour market shifts and the stubbornly stagnant compensation for lower-skill workers.

“I don’t mean to say the 1 percent thing is not a big deal. It is,” says Autor. But, “the real reason to worry about inequality” is “because of the falling bottom.”


Finally, as superstar economist Thomas Piketty told the CBC’s Lang & O’Leary Exchange this week, the time has come for a “pragmatic, non-ideological dialogue” about rising inequality, which would include more debate about whether high executive compensation has actually improved company performance. He also points out that while some degree of inequality can foster competition and innovation, too much of it crushes growth.

Perceptions of inequality in America, an economic diagnosis, and pop cultural observations

As the film industry unleashes its blitz of holiday releases upon our seasonally fatigued eyes, writer Noah Gittel argues in The Atlantic that the latest offering by filmmakers Joel and Ethan Coen invites a glimpse into the growing preoccupation of income inequality, and the injustice at being cheated of “the fairness promised by the American Dream.” It’s a mark that has become standard for the brothers who, as Gittel observes, have established their film careers in tandem with the persistent widening of the nation’s wealth gap. As such, the brothers “have embedded the economic realities of their time into their lead characters, most of which live just one success, financial or otherwise, away from happiness.” They’ll be our mirror.


Separately in The Atlantic, research from a Psychological Science journal study shows that Americans are terrible at estimating the true extent of income inequality. This, as writer Emily Badger points out, might not be so surprising in and of itself—after all, as far as concepts go, income inequality is one that’s fairly abstract. Maybe more telling than the finding itself is just how Americans are miscalculating inequality’s blow: an error of overestimation, not under (and just to be clear, income inequality in America is very bad and getting worse). Sometimes, mass misperceptions speak volumes.


As if the individual impacts of income inequality weren’t enough to bruise spirits, consider that three dozen economists have agreed on this: that income inequality is actively weakening the U.S. economy.

“What you want is a broader spending base. You want more people spending money,” says Scott Brown, chief economist at the financial advisory firm Raymond James. While spending by the wealthy makes for a stock market boost, as the Associated Press rightly points out, a wide gap in pay limits the spending power of low and middle-income Americans, which means that stock market gains largely benefit the already affluent.


And finally, because it’s the holiday season and we deserve some lighter fare, a fun ramble from Slate on 2013’s great income inequality-related pop music (we’re looking at you, Kanye).



Dispatches on inequality in Canada, and America’s confused food policy

While U.S. income inequality remains one of today’s prevalent concerns, Canada is not without its own substantial rifts. The Globe and Mail has endeavoured to examine these in a two-week-long series, “The Wealth Paradox,” which breaks down the health care, education, recreation and wage effects of the gap between Canada’s rich and everyone else.

Writer Greg Keenan probes the relationship between union deflation and the shrinking middle class in a profile of the Canadian Pacific Railway, which cut 3,000 unionized jobs between 2000 and 2010 while doubling, tripling and quadrupling the salaries and bonuses of its five highest-paid executives.

On the opposite end of that spectrum is tool retailer Lee Valley, whose founder Leonard Lee has stubbornly stuck to a 10:1 wage ration between the company’s highest and lowest-paid workers. “You get tremendous loyalty from employees if they enjoy their work and they are participating in the income and they have the authority that they need to execute their job,” says Lee. Tavia Grant reports.

“Research estimates that medical care accounts for only 25 per cent of health outcomes, while another 25 per cent is related to genetics and fully 50 per cent depends on the socio-economic determinants of health like income, education, housing, physical environment and community engagement,” writes André Picard, as he uncovers the shortfalls of a universal health system. The findings are striking: even in Canada, there are clear life expectancy disparities between rich and poor (7.1 years for men and 4.9 years for women, on average, between the highest and lowest income groups). Also striking: children born to low-income families are three times as likely to suffer mental health problems than those born into wealth.

Finally, in non-Canadian (but still notable) coverage: Joseph E. Stiglitz comments for the New York Times‘ “Opinionator” blog, on the House Republicans’ proposal to cut food stamp benefits by $40 billion over a 10 year period—particularly troubling in that the number of Americans on food stamps soared by over 80 percent in the last five years. “By cutting back on food stamps,” he writes, “we are ensuring the perpetuation of inequality, and at that, one of its worst manifestations: the inequality of opportunity.” Food for thought.