On March 4, economist Robert H. Frank spoke to a standing room only audience in the Chemistry Auditorium. Frank is the H.J. Louis Professor of Economics at Cornell University, and the author of the book Luxury Fever and co-author of the book The Winner-Take-All Society. Frank's talk titled, "Does Rising Inequality Harm the Middle Class?" was based largely on the arguments presented in Luxury Fever, and addressed the psychological costs of income inequality, and the relationship between relative income and subjective well being.
Frank suggested that due to the increasing incomes of the upper class, they are spending more money on luxury items. Such behavior is forcing middle class families to spend money on luxuries they cannot afford. The result is a "cascade of effects starting at the top" and eventually becoming a burden on the middle class family. Frank also proposed that when everyone spends more, well being does not change. Therefore, if everyone were to remain at a constant level of consumption, society would not be worse off, but better off due to a conservation of resources. If the growth in the current luxury consumption patterns could be slowed, money could be diverted to forms of public service benefiting all. During the question and answer period, Frank proposed a "luxury tax" as a method of slowing the growth.
This talk was sponsored by the Arthur Levitt Public Affairs Center and the Economics Department.
