Why the Status-Conscious Would Want to Tax the Rich

Three common reasons for wanting to raise taxes on the rich include: 1) that’s where the money is, 2) envy, and 3) envy-avoidance.

A fourth reason for wanting to raise taxes on the rich: to boost one’s social status. Or more accurately, to mitigate one’s (perceived) inferior social status.

Lots of people are status-conscious. They strive for more and better material goods (and services) and/or higher pay in an effort to gain more respect and feel good about where they stand in relation to others. “Money often translates into the respect of others and high social status, and so even those who don’t want many worldly goods may want a high income for the respect it brings,” write Ed Diener and Robert Biswas-Diener in their book Happiness: Unlocking the Mysteries of Psychological Wealth.

In a study, Harvard economists David Hemenway and Sara Solnick asked respondents if they would rather earn $50,000 a year in a society where others are making $25,000, or earn $100,000 a year when others are making $200,000. Fifty-six percent chose the former – i.e. being relatively poorer at $50,000 a year, only because of the higher social status that would entail.

This implies that lots of people no doubt hate it when other people earn more than them, not necessarily because of envy, but because it means they feel less respected than the person earning more. It’s a type of inferiority complex. In order to gain more respect – or more accurately, in order to feel less disrespected – they’d really like to bring those wealthier persons down a notch or two.

What better way to do that than to – you guessed it – raise taxes on the rich?

My hypothesis is that this is another reason why you find a lot of wealthy Democrats: because even though they’re wealthy or upper-middle class, there are still a lot of folks wealthier than them. And they may desire higher taxes on the rich particularly if their taxes would stay the same or wouldn’t rise as much. Of course, this doesn’t apply to all wealthy Democrats, but it likely applies to some of them. They’re just like the people in they study who wouldn’t like to be earning $100k while others are earning $200k.

Another implication: while the left would have you believe that left-leaning people don’t care as much about wealth or materialism or staying ahead of the Joneses, a lot of them surely do. The more you care about such things, the more likely you are to be status-conscious, and therefore the more likely you are to want to reduce the higher status of others in order to gain more (perceived) respect for yourself.

Of course, in addition to wanting to raise taxes on the rich because of envy, this “status inferiority complex” as I call it would be a selfish, shallow, and immature reason for wanting to do so. That’s why I suspect that testing this hypothesis would be difficult: few people would admit to it. But it still could be possible, perhaps by surveying psychologists based on what they’ve gleaned in therapy sessions, or by surveying people themselves with the hope that some of them would be brutally honest in their answers. This is a long shot but hey reader, if you’ve ever felt that way, please share your thoughts in the comment section below.

On the flip side, if the above is true, then it’s plausible that some wealthy folks resist higher taxes on them due to a status superiority complex, a.k.a. snobbery. And they likely would harbor both a status superiority complex and a status inferiority complex simultaneously, assuming there are still people richer than them. But if raising taxes on the rich is bad policy anyway – which it usually is because it disincentivizes production thereby harming economic growth and thus harming everyone – then the societal consequences of a status superiority complex aren’t near as harmful as a status inferiority complex.

Meanwhile, in the first paragraph of this article you’ll note that I didn’t include “reducing inequality” in the list as to why people want to raise taxes on the rich. This is because it’s implied in the other items in the list.

Surely inequality would be bad if we lived in a zero-sum society where the rich get richer through wealth coercion – i.e. stealing from the poor and middle class and thereby making the poor poorer. But we live in a positive-sum society where the vast majority of those who are rich got that way through wealth creation, not wealth coercion. The history of America is the story of the rich getting richer and the poor and middle class getting richer. (Of course there have been some years where the poor have gotten poorer, like now during the Obama years, but it’s certainly not because of wealth coercion by the rich, but because of a relative lack of wealth creation.)

So regarding inequality, who cares if the rich get richer as long as everyone else gets richer as well?

I’ll tell you who cares: the envious, the envy-avoiders, and the status-conscious.

More Bad News on the Self-Esteem Movement

One hears so much about childhood depression these days in addition to the adult kind, one wonders what’s causing it all. Here’s what appears to be one factor: the self-esteem movement.

Though I poke at LiveScience.com in the below post, the website is definitely worth reading. One of its latest reports is that undeserved compliments may harm, not help, kids’ self esteem.

“Students who rated their own performance as much higher than it actually was were significantly more likely to feel depressed than those who had rated their performance more accurately,” they write. They cite researchers who conclude that “These findings challenge the popular notion that self-enhancement and providing positive performance feedback to low performers is beneficial to emotional health.”

The article states that under the influence of the self-esteem movement, ” teachers are often pressured to provide unfounded positive performance feedback to their students.” So it seems a little more tough love could help.

It notes, however, that self-effacement may be just as bad. “The studies showed that subjects who rated their performance as much lower than it actually was also showed higher levels of depression.”

So it looks like one has to find the right balance between positive and negative feedback. Hey, how about just telling kids the truth, free of either sugar-coating or rubbing salt into their wounds.