Catherine Rampell has a very nice piece about why the objectively rich feel poor, although Brad DeLong is right, a log-income chart is better:

Brad DeLong

I’d like to elaborate a bit here.

What Rampell has in mind is a vision of society as being something like a long street running up a hill, in which rising altitude goes along with rising income. And each person along that street evaluates himself or herself relative to the neighbors on either side, rather than the whole street.

Now, there are two slightly different interpretations of this story. What Rampell seems to suggest is that people compare themselves only to their uphill neighbors — and since the hill gets steeper as you move up the street, the rich feel worse because the guy to the right is increasingly different from themselves.

An alternative is that people compare themselves to neighbors on both sides, but it’s the convexity that changes: if you’re in the middle of the income distribution, your uphill neighbor is about as much richer than you than your downhill neighbor is poorer, but in the upper reaches that’s no longer true. (I was taught, long ago, that the income distribution is more or less lognormal for most of its range, but turns Pareto at the upper tail. If you have no idea what I’m talking about, never mind.)

Either way, what’s true is that the gap between the rich and the superrich has grown dramatically. Here’s the Piketty-Saez data showing the top 1 percent pulling away from the next 4; the same thing is happening for the top 0.1 versus the losers who are in the 99.0-99.9 range, and so on:

Piketty and Saez

The net result is a society of winners as whiners, where people who are not only doing fine but doing much better relative to the median than they were a generation ago nonetheless feel left behind.

A personal note: I’ve always found extreme inequality at the top rather relaxing from my own point of view. Robin and I are doing very well, of course, but others are much richer; the fact, however, is that especially in New York you know that no matter how much you make, there are other people making so much that your earnings look trivial. So what’s the point of evaluating yourself that way? Of course, it’s probably a lot easier to feel that way when you’ve gotten plenty of other ego-boosters.