IS GETTING rich worth it? Or are we stuck on a treadmill, going nowhere?
The biggest Australian study of income came out this week. It found strong growth on income and wealth among all kinds of households, as this chart of rising incomes shows.
Median equivalised income by family type. Source: HILDA 2016Source:Supplied
But the survey also shows Australia is still a land of poverty and deprivation. The interesting thing is how they go looking for deprivation.The survey asked thousands of Australians whether dozens of items were essential.The one thing the most people agreed was essential was medical treatment; the thing the least people agreed on was a week’s holiday away from home each year. Okay, fine.But in the middle were some weird results. Fifty-nine per cent said it was essential to have comprehensive car insurance. Hmm. Fifty-five per cent said it was essential to have a car and 79 per cent said a washing machine was essential.
Selected data from HILDA 2016.Source:Supplied
The researchers then used the things a majority of people agreed were essential to measure deprivation. If you don’t have them and couldn’t afford them you are counted as deprived.In most of the world a car, insurance and your own washing machine would be considered luxuries. They were in Australia, not so long ago. Now, apparently, they are the minimum price of entry to society.This seems to be the way society goes. It grows richer and richer, but constantly raises expectations so that it gains no lasting dividend from being so much richer. Instead it just gets anguish about missing out.
We are a lucky group of people, and sometimes we forget that. An average Australian is in the richest five per cent of the world for income. Even an Australian in the bottom 10 per cent of the income distribution is still in the top 17 per cent of the world. Why are we still so disgruntled?Living in a rich country is great. It comes with low crime, nice infrastructure, good health and government services. But the silver lining comes with a cloud.As society gets richer our cut-off for what counts as poverty and deprivation rises. A lifestyle that would make someone a king in another part of the world makes them miserable here. Our relative poverty line is $23,000 a year, after tax. Relative Poverty stays more or less steady even though absolute poverty — having more than a certain amount — has fallen.
Share of population in income poverty Source: HILDASource:Supplied
We see lots of evidence that rising wealth in rich countries doesn’t lift happiness. America has been doing happiness surveys since 1946 and they show basically no improvement. Even though in that time the average American has doubled their wealth several times.A BIT OF FRIENDLY COMPETITION?Getting richer in a country that is getting richer…