Tyler Cowen on Inequality

Tyler Cowen has received a lot of attention for this post on inequality in which he attempts to discern the inequality that matters from inequality that doesn't (or inequality that is unacceptable vs. inequality that is). I'm still chewing on it, but I wanted to address his first point, which is that that "the income of personal well-being" has markedly improved over the past century.

First, the inequality of personal well-being is sharply down over the past hundred years and perhaps over the past twenty years as well. Bill Gates is much, much richer than I am, yet it is not obvious that he is much happier if, indeed, he is happier at all. I have access to penicillin, air travel, good cheap food, the Internet and virtually all of the technical innovations that Gates does...
Compare these circumstances to those of 1911, a century ago. Even in the wealthier countries, the average person had little formal education, worked six days a week or more, often at hard physical labor, never took vacations, and could not access most of the world’s culture. The living standards of Carnegie and Rockefeller towered above those of typical Americans, not just in terms of money but also in terms of comfort.

I think that's basically true. But there are a couple of major caveats. First of all, I think he over-reaches here:

Like the vast majority of Americans, I have access to some important new pharmaceuticals, such as statins to protect against heart disease. To be sure, Gates receives the very best care from the world’s top doctors, but our health outcomes are in the same ballpark.

Health care is, in fact, one of the very things that separates a person like Bill Gates from the average American, which is why health care reform has been so important. An average middle class American may enjoy many of life's finer things just like Gates does, but being hit by a major illness can mean bankruptcy and ruin. Gates obviously isn't faced with that problem.

The second caveat is that much of the decrease in the inequality of personal well-being is artificial; millions of Americans can only experience those finer things by hugely over-extending themselves and going into debt.

Having said all that, I'm happier being an average Joe today than an average Joe in 1901.