We Will Always Want More Income

Karl Marx, John Maynard Keynes, and many others, have suggested that there is some level of income at which we will have enough, and want no more. 

David Friedman, in his price theory text, and others, have doubted this.  I am with the doubters.  I suspect that we sometimes think a certain amount of money would satiate us, because at some level way beyond our current income, it does not reward us to think too much about how we might spend so much money.

But if you are Rockefeller, and you see what good comes with founding universities, curing diseases, and the like, then you can easily imagine what good would come from even more money, even if, like Rockefeller, you are the richest person on the face of the earth.

In the discussion excerpted below, Robert Frank gives another argument for joining the doubters:  that as our income rises, so do our standards for quality.  (I think this argument is sound, but less important than the one sketched above.)  

 

When my wife and I were living in Paris a few years ago, we went out to dinner with well-to-do friends who were visiting from the United States.  The restaurant we chose had a good reputation and, by our standards, was not cheap.  But although my wife and I enjoyed our meals enormously, our friends found theirs disappointing.  I’m confident they were not trying to impress us or make us feel inferior.  By virtue of their substantially higher income, they had simply grown accustomed to a higher standard of cuisine.

. . .

By placing the desire to outdo others at the heart of his description of insatiable demands, Keynes relegated such demands to the periphery.  But the desire for higher quality has no natural limits.  Keynes and others were wrong to have imagined that a two-hour work week might someday enable us to buy everything we want.  That hasn’t happened and never will.

 

For the full commentary, see: 

ROBERT H. FRANK.  "ECONOMIC SCENE; The More We Make, the Better We Want."  The New York Times  (Thurs., September 28, 2006):  C3.

(Note:  ellipsis added.)

 

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