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In the wake of the defeat of the Illinois fair tax amendment, some proponents are asking why people are apparently voting against their own interests. Why were people so susceptible to anti–fair tax messaging? This has me thinking about the diminishing marginal utility of money.Permalink On twitter.com
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For people who’ve never had much, it may be hard to intuit that the marginal utility of money really does diminish. If you make $20,000/year, making an additional $50k would transform your life, but if you make $300,000/year, an extra $50k is just a bit of extra padding.Permalink On twitter.com
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But when you’ve lived your whole life struggling to make any amount more, the idea that the government could take more of it feels unfair.On twitter.com
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Even the idea that the government could take more of it from rich people feels unfair, because to a lot of people, that bit of extra money would be extremely valuable — even if it’s really not so valuable to the people actually subject to the tax.Permalink On twitter.com
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This is purely speculation on my part, so if anyone has any behavioral econ research on this, I’d be interested in taking a look. If it’s true, it has real implications for messaging around progressive economic issues.Permalink On twitter.com
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For example, focusing on how little difference that extra money makes to high-income people (beyond simple greed) is necessary to understand the unfairness of CEOs making 300× what an regular worker makes. #fairtaxillinois #ilpolPermalink On twitter.com
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Remember: 1 million seconds: 11.6 days 1 billion seconds: 31.7 YEARSPermalink On twitter.com