Stocks recently hit record highs, which means, barring an autumn crash, this will be a very good year on Wall Street. It may even beat last year, when the average year-end bonus hit $137,580 (in January, the Ritz-Carlton in Battery Park dutifully offered a "Friends with Money" package including accommodations for 32 guests, fireworks and helicopter tours for that exact price tag).
It's enough to make anyone green. But if you believe some of the recent literature, it's not poor folks muttering about these out-sized gains. No, pundits tell us, huge bonuses, piled on top of huge salaries, are instead nurturing a new resentment within the top 1% of this nation's income distribution. Fortune columnist Matt Miller's "Revolt of the Fairly Rich" manifesto started the chattering as it circled inboxes last fall. He predicted a battle "between what I call the 'lower upper class' and the ultrarich." People who thought six-figure salaries would end their cares have discovered that such wages may not even cover a primary residence in desirable neighborhoods. Lawyers and doctors are lamenting the returns classmates who jumped to hedge funds earn and a few private equity titans, the Wall Street Journal tells us, have even driven up the cost of Greenwich, Connecticut silent auctions. No wonder "economic resentment at the bottom of the top 1% of America's income distribution is the new wild card in public life," Miller wrote.
Yes, the merely bourgeois are fighting the plutocrats. But while the image of lawyers or professors waging class war against bankers is novel, the emotion fueling the struggle - envy - is as old as the seven deadly sins themselves. The difference is that now, a democratization of extreme wealth has made the good life seem tantalizingly attainable for people like us. Envy burns brightest when differences are small.
But that doesn't make such envy any more productive. As novelist Joseph Epstein once wrote, envy is the only deadly sin that is "no fun." Not only does it poison your thoughts, envious people carry more debt than others. Getting out of debt is always a top goal for Americans. Fortunately, new research is showing that, when it comes to one's lot in life, a simple change in perspective may not only help curb debt, it may be as good for your health as losing a few pounds.
Certainly, envy drives us to do irrational things. In one 2002 study, economists at the University of Warwick in the United Kingdom found that 62% of subjects paid to play a computer game willingly trimmed their own earnings in order to destroy the wealth of players they thought had received unfair windfalls. A recent Business Week survey of 2500 managers found that 40% would prefer to receive a $10,000 bonus, if it were the largest among their co-workers, than a $20,000 bonus, if it were the smallest. This desire to make sure no one has more also leads to poor spending choices. Another British study found that people who said they were often envious were almost 50% more likely to have overdue debts than people who weren't.
Of course, people have envied others since Cain slew Abel. But these days, the vice is reaching high up the income distribution for two reasons.
The first is that extreme wealth seems more doable. Once, almost all the truly rich scored their status by birth. You could work hard in school, choose a prestigious career, and still never become the Queen of England. Now, the guy who did a family practice residency right next to you, but who chose to join a medical stock hedge fund afterwards, can easily earn ten times your salary.
The second is that we see this wealth up close. Lower upper class members attend college reunions with the ultrarich. They send their kids to the same schools, where "everyone" wears $200 jeans and vacations in Vail. Not surprisingly, the U.S. personal savings rate has been mired in negative territory since 2005 as people try to keep up.
Every year, Americans vow to budget our way out of the debt envy lures us into, just as we resolve to exercise more, and get more out of life. All sound tough, but some research suggests that making progress toward these goals requires nothing more than a perspective shift. While it's very American to look up the income distribution to judge how we're doing, you can look the other way. The median U.S. household income of $46,326 looks small compared to a $137,580 bonus, but per capita income in Malawi is roughly $600 a year. The entire top half of the American income distribution is richer than 99% of the people ever to walk the planet. One of the biggest components of happiness, it turns out, is making a habit of reminding yourself of this and other things to be grateful for.
In a few recent studies, for instance, Robert Emmons of the University of California-Davis and Michael McCullough of the University of Miami found that people told to keep weekly gratitude journals got more exercise, were more optimistic, and reported fewer physical complaints than a control group that wrote down the week's events. Habitually grateful people, they also learned, are less likely to compare themselves to wealthy people (a practice that leads to debt). They are more likely to make progress toward personal goals, and report less depression.
Of course, waking up each morning and saying "I'm grateful I sleep in a bed!" sounds silly. But so does a class war between the Jersey shore and the Hamptons beach house sets. While no one needs the kind of money America's richest have, it's unclear anyone actually needs the kind of money America's almost-rich have, either. Too bad that idea gets lost in the constant urge to keep up with one's Greenwich neighbors.
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