GLOBAL INEQUALITY

Why We Need A Plenty Line

David Woodward, nef (the new economics foundation) Fellow; Saamah Abdallah, Senior Researcher, Centre for Wellbeing, nef

PAPER SUMMARY

In the following paper we propose a “plenty line” as a counterpart to the poverty line. We present this as a means of focusing public and political attention on the issue of over-consumption. Here we ask, is there a level of income such that people with incomes above this level have minimally greater well-being than those with incomes at this level?

While our analysis is complicated by the nature of the data available (namely, its reliance on self-reporting of income, and more specifically self-attribution to a limited range of income bands) and the relatively small sample sizes in most relevant surveys, we find indicative evidence for the existence of “plenty lines” ranging between household incomes of $35,000 and $107,000 in six Western European countries (and at $20,000 in one Eastern European country), where well-being is defined in terms of life satisfaction.

While the reliability of these findings for individual countries is limited by the sample sizes, the fact that in only one of 22 countries (Switzerland) do the data appear clearly inconsistent with the existence of an (overall income) plenty line at some level of income would appear to suggest that such a line exists in at least some European countries. So, while we cannot yet identify where the plenty line lies with great precision, it seems clear that there is one. This is consistent with research in the United States which showed that there was no increase in well-being (defined in terms of affect) once household incomes reached $75,000.

Our analysis implies there is a case for policies designed to limit the growth of incomes beyond societal plenty lines – primarily higher incomes in developed countries (but also those of elites, particularly in highly unequal middle-income developing countries). But, the implications of the plenty line concept potentially reach much further. By highlighting – and potentially allowing us to quantify – the divergence between total income and societal well-being, the plenty line has the potential to provide a basis for a whole new economics, directed towards the achievement of our ultimate goals as society and not merely the maximisation of total production.

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