Rich or Poor Depends Upon Individual Preferences

Greg Mankiw posted this on his webpage. It reports on a study which showed that there are individual differences in financial goals. Some have wealth preferences and others prefer different things such as more leisure. Those with wealth preferences were more likely to attain their wealth goal. It concludes that this is evidence against the redistribution of income from the wealthy to those less well off. If anything, there should be upwards distribution to those with wealth preference.

Mankiw usually takes the position that rising inequality is the result of changes in the economy that place a premium on rare skills. In other words the economy has become more meritocratic. In that case, the downward redistribution of income is primarily a question of social values. Economics is silent about redistribution unless it impacts the economy. Conservatives usually argue that it discourages effort and savings..