Bob Frank discusses some startling effects of income inequality with the New York Times

1/12/2011 3:51:00 PM

Johnson professor of Economics suggests that simply looking at an individual's salary will NOT provide a full picture of their economic well-being

Excerpt from "The Toil Index" (New York Times, Jan. 7):

If earning $75,000 a year is the key to happiness — unless, of course, you earn less than the median income in your profession — here’s another measure of well-being: whether you can afford to live in a good school district.

In a paper presented at the American Economics Association convention in Denver, Robert H. Frank, professor of economics at Cornell University, talked about the deficiencies of assessing economic well-being simply by measuring the commonly accepted gross domestic product per capita.

Because of rising income inequality, he said, the number of hours that a worker earning the median wage would have to work in order to be able to rent a median-priced house grew dramatically between 1970 and 2000. That coincided with a sharp increase in income inequality. As Mr. Frank writes, “almost all significant income gains in the United States have been confined to the top quintile of the earnings distribution, and most of the income growth has been concentrated near the top of that group.”

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Bob Frank's Johnson at Cornell University Web page
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