Book Recommendation for June 2010

All meat and no potatoes wrote a reviewer for the heavily research based “Falling Behind –
How Rising Inequality Harms the Middle Class” by Robert H. Frank.

This is a book, while does not give direct professional direction for personal development, gives a context to understand our current economy. The world is a complex place, yes. Is one book going to give a whole perspective? Of course not. But I found this to be an immensely interesting book, supported by modern psychology experiments and ventures into understanding where we are, and where we are going.

Frank argues four points

1. People care about relative consumption more in some domains than others
2. Concerns about relative consumption lead to “positional arms races” or expenditure arms races focused on positional goods
3. Positional arms races divert resources from nonpositional goods, causing large welfare losses
4. For middle-class families, the losses from positional arms races have been made worse by rising inequality.

Robert H. Frank puts a lot of interesting points into a context: the growing inequality of income between the rich and poor, the stagnant wages of middle class families, the increased 200 extra hours women are working every year, the less comparative “good jobs” for educated individuals, and the growing work hours.

What I really enjoyed is that Frank puts all of this into psychology terms. For example he has this fantastic example about how middle class families can not live within 50 miles of Aspen, Colorado. The real estate is too high, too expensive. The residents of Aspen, Colorado, those who can afford the real estate, do not want to do the remedial jobs to support the local economy. Every weekday, there is a mass transit into Aspen, Colorado, and mass exodus away from Aspen Colorado, the driver depending on their ecomomic status.

Frank doesn’t write all this too criticize the rich, or point figures. He shows the data, shows the research between the psychological factors and the visible ecomomic behaviors, and shows the disconnect between what we want and what we have.

On a cartoon graphic with two affluent golfers, one about to tee,
One says “Researchers say I’m not happier for being richer, but do you know how much researchers make?