Archives for wealth



Everybody Gossips (and That’s a Good Thing): A New Freakonomics Radio Podcast

Our latest podcast is called “Everybody Gossips (and That’s a Good Thing).” (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript; it includes credits for the music you’ll hear in the episode.) 

In the show, Stephen Dubner talks about what gossip is, or isn’t; about the characteristics of the people who produce and consume gossip; and about the functions of gossip, good and bad. You’ll hear from our usual assortment of professors and theorists but also from TV/movie star Adrian Grenier (talking about what it’s like to be the subject of gossip) and Nick Denton, the publisher of Gawker (whose tagline is “Today’s gossip is tomorrow’s news”). Read More »



How to Control Runaway Entitlement Spending

At the Becker-Posner blog, Richard Posner offers some ideas for amending the entitlements programs that are “threatening the long-term solvency of the federal government”:

Which leads me to the first of the only two practical ideas that occur to me for slowing the increase in entitlement expenditures relative to the size of the economy: a shift in emphasis in medical research from length of life to ability to live independently. Independent living means living without home care (whether by relatives, thus taking time from them that they could use more productively in other activities, including paid employment, or by paid care—paid by the government in many cases) and being able—and wanting—to work. Independent living can be fostered by focusing medical research on problems of vision, musculoskeletal problems (which impair mobility), obesity, and dementia, in preference to research on curing and preventing cancer, heart disease, and stroke. 

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Are Gay Men Really Rich? A New Freakonomics Radio Podcast

Our latest episode is called “Are Gay Men Really Rich?”  (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript; it includes credits for the music you’ll hear in the episode.) It began with a question from Freakonomics Radio listener Danny Rosa:

ROSA: I’m wondering why gay men are so affluent and successful. If you walk around neighborhoods like West Hollywood in Los Angeles, the Castro in San Francisco, and Boystown in Chicago, they are all very well-kept, expensive, and highly sought-after. So, I’m thinking, what is it about gay men and the gay culture that makes them so wealthy?

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Do Rappers Exaggerate Their Wealth?

In his new album, rapper Jay-Z expresses skepticism about some of his colleagues’ claims of extraordinary wealth, saying, “The truth in my verses, versus, your metaphors about what your net worth is.”  So are your favorite rappers lying about how rich they are?  Bloomberg Businessweek straightens out the confusion with a great graphic comparing alleged vs. actual wealth.  Here’s a preview: Nicki Minaj is not “mak[ing] a billi like a big goat.” (HT: The Big Picture)



How Much Financial Inequality Is Due to Financial Illiteracy?

Annamaria Lusardi, whose ground-breaking research on financial literacy has been featured here several times, has put out a new working paper (with co-authors Pierre-Carl Michaud and Olivia S. Mitchell) that could be read as laying much of the blame for the lack of household wealth at the foot of the members of said household. The paper is called “Optimal Financial Knowledge and Wealth Inequality” (abstract; PDF):

While financial knowledge is strongly positively related to household wealth, there is also considerable cross-sectional variation in both financial knowledge and net asset levels.  To explore these patterns, we develop a calibrated stochastic life cycle model featuring endogenous financial knowledge accumulation.  The model generates substantial wealth inequality, over and above that of standard life cycle models; this is because higher earners typically have more hump-shaped labor income profiles and lower retirement benefits which, when interacted with precautionary saving motives, boost their need for private wealth accumulation and thus financial knowledge.

Our simulations show that endogenous financial knowledge accumulation has the potential to account for a large proportion of wealth inequality. 

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Acemoglu and Robinson Answer Your Questions

Last week, we solicited your questions for economist Daron Acemoglu and political scientist Jim Robinson, who just published a new book called Why Nations Fail: The Origins of Power, Prosperity, and Poverty and are now blogging on a variety of interesting development topics.

Their thoughtful responses below cover everything from robber barons to the artificial construction of African nations to whether the race of a country’s leaders determines its success.  A big thanks to Daron, Jim, and all our readers for another great Q&A.  

First, a note from Daron and Jim: “We thank everybody for these excellent questions and comments. We had to pick a few to be able to provide detailed answers. Read More »



Wondering Why Nations Fail? Bring Your Questions for Daron Acemoglu and James Robinson

When it comes to economic ideas, Daron Acemoglu never thinks small. Widely acknowledged as one of the most insightful economists alive, Daron seems to have brilliant things to say about any and all things economic.

When you have that sort of gift, you might as well go after the biggest problems imaginable.  Thus his latest book, Why Nations Fail, written with Harvard political scientist James Robinson.

It is an awesome piece of work.  So full of ideas and wisdom, but still so easy to read.  I just love it.  Daron and Jim have agreed to take your questions about their new book, so please leave them in the comments section below.  To get you started, here’s the table of contents: Read More »



The Wealth Effect: It Ain’t Pretty

A fascinating Boston Globe article by Britt Peterson reviews the research on the far-reaching psychological effects of wealth. “Rich people have a harder time connecting with others, showing less empathy to the extent of dehumanizing those who are different from them,” writes Peterson. “They are less charitable and generous. They are less likely to help someone in trouble.”  Even more depressing: These traits are “developed,”  not “inherited.”

While money may not be the root of all evil, it can make people “insensitive” according to Kathleen Vohs, one of the researchers whose work was profiled in the article. “When people are reminded of money, they get better at pursing their personal goals,” she explains. “On the negative side, they become poor at interpersonal functioning. They’re not all that nice to be around. They’re not openly mean or disagreeable, but they can be insensitive.”   Read More »