Robert Frank examines Why Living in a Rich Society Makes Us Feel Poor:
H. L. Mencken once defined a wealthy man as one who earns $100 a year more than his wife’s sister’s husband. A recent study found striking support for Mencken’s definition. The economists David Neumark and Andrew Postlewaite examined the behavior of a large sample of pairs of American sisters, each containing a sister who did not work outside the home. The authors’ goal was to learn what factors might influence the other sister to seek paid employment. They rounded up all the things that are supposed to affect the decision to work — the unemployment rate in the local labor market, the wage rate, education. All of these factors had some impact, but relative income was the most powerful: a woman in their sample was 16 to 25 times more likely to seek paid employment if her sister’s husband earned more than her own.