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Does Growing Inequality Harm the Middle Class?

Author

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  • Robert Frank

    () (Johnson Graduate School of Management, Cornell University)

Abstract

Respected economists invoke the Pareto criterion to argue that inequality doesn't really matter so long as no one ends up with less in absolute terms. Using income levels to measure the well-being of individual families, these economists argue that since the rich now have much more money than before and the middle class doesn't have less, society as a whole must be better off. Yet "having more income" and "being better off" do not have exactly the same meaning. I argue that changes in spending patterns prompted by recent changes in the distributions of income and wealth have imposed not only important psychological costs on middle-income families, but also a variety of more tangible economic costs.

Suggested Citation

  • Robert Frank, 2000. "Does Growing Inequality Harm the Middle Class?," Eastern Economic Journal, Eastern Economic Association, vol. 26(3), pages 253-264, Summer.
  • Handle: RePEc:eej:eeconj:v:26:y:2000:i:3:p:253-264
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume26/V26N3P253_264.pdf
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    Citations

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    Cited by:

    1. Mehanna, Rock-Antoine, 2004. "Poverty and economic development: not as direct as it may seem," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 33(2), pages 217-228, April.
    2. Jon D. Wisman & Barton Baker, 2009. "Increasing Inequality, Status Insecurity, Ideology, and the Financial Crisis of 2008," Working Papers 2009-14 JEL classificatio, American University, Department of Economics.
    3. Jon D. Wisman & Matthew E. Davis, 2013. "Degraded Work, Declining Community, Rising Inequality, and the Transformation of the Protestant Ethic in America: 1870–1930," American Journal of Economics and Sociology, Wiley Blackwell, vol. 72(5), pages 1075-1105, November.
    4. Ed Hopkins & Tatiana Kornienko, 2010. "Which Inequality? The Inequality of Endowments versus the Inequality of Rewards," American Economic Journal: Microeconomics, American Economic Association, vol. 2(3), pages 106-137, August.
    5. Blum, Matthias, 2013. "The influence of inequality on the standard of living: Worldwide anthropometric evidence from the 19th and 20th centuries," Economics & Human Biology, Elsevier, vol. 11(4), pages 436-452.
    6. Jörg Baten, 2002. "Did Partial Globalization Increase Inequality? Did Inequality Stimulate Globalization Backlash? The case of the Latin American Periphery, 1950-80," CESifo Working Paper Series 683, CESifo Group Munich.

    More about this item

    Keywords

    Income; Inequality;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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