Work Choices, Money, and Status
12th October 2010
Arnold Kling get sociological.
People often care more about status than pay. Most college-educated parents would rather see their offspring work for $40,000 a year at a “professional” job than earn $60,000 a year as an air conditioning repairperson.
I suspect that this has a lot to do with the prevalent ‘send every kid to college’ viewpoint–it’s really just a search for status, the desire to ‘work clean’.
Many, perhaps most, of the people going to college these days (a) just aren’t sufficiently intelligent to handle it and/or (b) aren’t really suited to the sort of work for which college is the appropriate preparation. I’ve got three degrees and I’d much rather be working as a cabinetmaker than at anything I’m likely to get a job doing these days; unfortunately, it’s too late in life for me to switch, so I’ll just wait until I retire and do it as a hobby (if at all; I’m pretty lazy).
As the time horizon gets long, the effects of monetary incentives and status motives may be hard to disentangle. In the short run, you raise marginal tax rates, and few people reduce work effort, because the status of being “employed” is much higher than the status of being a homebody. However, once a few people decide to become homebodies, the status of being a homebody goes up enough that many people choose not to work. So the long run effect of the higher marginal tax rate is much higher than anything you might have predicted, because it has affected cultural norms. I worry about this much more near the median of the income distribution than at the very high end.