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Falling Behind: How Rising Inequality Harms the Middle Class

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Falling Behind: How Rising Inequality Harms the Middle Class

by Robert H. Frank

3.81 · rating details · 75 ratings · 16 reviews

Although middle-income families don't earn much more than they did several decades ago, they are buying bigger cars, houses, and appliances. To pay for them, they spend more than they earn and carry record levels of debt. In a book that explores the very meaning of happiness and prosperity in America today, Robert Frank explains how increased concentrations of income and w...more

Paperback, 148 pages

Published July 1st 2007 by University of California Press

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Oct 22, 2007

Carl rated it

I was initially skeptical that this book wouldn't be more than a polemic about the rich simply having too much, I was pleasantly surprised that it makes a lot of sense. An economist at Cornell, Robert Frank delivers a taught book (123 pages) that's all meat and no fluff, but with plenty of everyday examples to illustrate the ideas behind his economic arguments.

Everyone standing up from their seats at a concert to get a better view leaves no one better off than before (and now everyo...more

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Dec 30, 2008

AC rated it

An interesting study of how the middle class can either put themselves at financial risk by trying to keep up appearances or maintain middle class life styles when prices go up, or be squeezed out of the consumer market by the bloating of prices caused by the rich trying to out-do each other. It was a little soft on providing anything more than a quick fly-by of these concepts. The main goal of the book seems to emerge near the end when the author begins his spin for tax reform (apparently the...moreAn interesting study of how the middle class can either put themselves at financial risk by trying to keep up appearances or maintain middle class life styles when prices go up, or be squeezed out of the consumer market by the bloating of prices caused by the rich trying to out-do each other. It was a little soft on providing anything more than a quick fly-by of these concepts. The main goal of the book seems to emerge near the end when the author begins his spin for tax reform (apparently the first 100 pages of the book were an attempt to set up the need for this). Not that I necessarily disagree with the need for some such reform, but when it appears here and is the most detailed part of the book it feels like the first 100 pages were just a hasty set up to get to the main course.

At one point the author suggests that a belief that the rich have "captured" Washington and are trying to use it to further advance their own interests with the tax breaks targeting the rich would require that the rich have a naive view of their own self-interest (because, the author argues, many of the supposed advantages they've set up for themselves have not gained them as much as they think). It seems reasonable, as the author has not anywhere previously pegged the ultra rich as being geniuses, that they could very well have a naive view of what they should be doing to promote their own interest and have made the blunders in their politics that he tries to argue they couldn't be making unless they were naive. To argue that something isn't happening because it wouldn't be the best way for it to happen is absurd (I'm reminded of the scene in Erik the Viking when the island is sinking because someone has spilled blood on the island, in defiance to the gods rules, and the island inhabitants, while the water rises around them, steadfastly argue that it isn't happening because something unacceptable would have had to occur for the island to sink). We see evidence every day that the rich can turn into idiots when the chance to get even more money presents itself (consider the investments with Madoff by people already loaded--evidence suggests now that even moderate investigating would have sent up red flags years ago--but none of these millionaires researched anything except what Madoff told them he could get them and they went all-in).

There are some really good aspects to this book--the "smart for one, dumb for all" concept is well stated. Some of his most powerful work could stem from bringing in facts like in the 1980s the average CEO made about 40 times as much as the average worker and now they make over 500 times as much (while income has stayed relatively stagnant, in terms of real purchasing power, for most everyone else), or that even after 9/11 more and more containers come into our ports uninspected due to cuts in staffing for port authorities while tax breaks centered on the excessively wealthy continue to be passed.
Being able to point out where the balances have been heavily skewed by what goes on in Washington D.C. and how that has trickled down (unlike income which has never done that) helps to solidify some of the ideas the author is presenting.

(less)

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Aug 10, 2011

Stephen Wong rated it

Work more, buy more, borrow more, keep up, work more to keep up, buy more to keep up, borrow more to keep up, keep up more to keep up.

Whether on one or two incomes, the middle class family apparently relentlessly pursues aspirational and positional goods in what the author refers to as "smart for one, dumb for all" stratagems of escalation. The eccentric might survive being eaten up in the game by getting off the hedonic treadmill, not by playing at it better nor by gaming the rules. ...more

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Aug 24, 2011

Margaret Sankey added it

This is another strangely named book, since it is a defense of the Duesenberry effect, "demonstration effect" or "relative dissatisfaction" and promotion of its inclusion in understanding the financial meltdown. Middle class people who see the Kardashian wedding or Bill Gates' house are not directly envious of them, but the inflation of expectation of wedding or house or child's lavish birthday party bumps down the social scale until people work longer hours, commute huge di...more

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Aug 21, 2011

Wordwizard rated it

An interesting analysis of how context affects what people choose to spend time and money on. It's about half economic and half sociological. I thought the idea that expectations trickle down was interesting and makes sense. Basically, he says that people try to stand out from their peers, but then the rest catch up, so the bar is constantly rising. Increases in house sizes among the rich can affect what the near-rich see as normal, which can affect what those in the next-lowest income bracket t...more

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Sep 25, 2010

Libby rated it

Shelves: policy

very good. I appreciated reading this directly after Perfectly Legal - they complement each other well.

Perfectly Legal makes the argument that in recent American history (since Reagan at least) our taxes have been structured so that wealth trickles up. (cue: our political processes assure that the wealthiest of our society have disproportionate access to policy makers via political fundraisers and campaign contributions, thus their concerns are heard most often.)
Falling Behind...morevery good. I appreciated reading this directly after Perfectly Legal - they complement each other well.

Perfectly Legal makes the argument that in recent American history (since Reagan at least) our taxes have been structured so that wealth trickles up. (cue: our political processes assure that the wealthiest of our society have disproportionate access to policy makers via political fundraisers and campaign contributions, thus their concerns are heard most often.)
Falling Behind ties in a lot of threads of contemporary discussions - we work longer hours, our houses get bigger, our commutes get longer, we experience more stress and anxiety, we eat worse and have less leisure time, communities disintegrate. The explanation he offers is that consumption patterns trickle down - and for perfectly rational economic reasons. In order to attain economic success, or even hold onto your seat in the middle class, you have to emulate the rich through the wardrobe, the car, the gifts you exchange - but without the economic resources to maintain the lifestyle we go into debt/pick up another job/more hours/move further away from our job.

p. 48 "Looking good is an inherently relative concept... If others begin wearing suits of higher quality, you become less likely to make a favorable impression on interviewers. Your best response might be to spend more on clothing as well, to preserve your chances of landing the job you want. From the collective vantage point, there is an obvious inefficiency here, since when everyone spends more on clothing, each candidate's probability of success remains the same as before. But from the perspective of the individual buyer, such expenditures are anything but inefficient."

I want to work for tax policy that halts the redistribution of wealth upward and preserves our investments in public resources - transit, water treatment, libraries, public schools.
The best thing to come out of the recession is captured in those phrases from department store commercials, "frugalista." The sense that extravagance and gaudiness is not in step with the moment, offensive to those who struggle, and rather unhip.

I love this: (p.89)
"Everyone lives in 4,000 square-foot houses and has one week of vacation each year.
vs.
Everyone lives in 3,000 square-foot houses and has four weeks of vacation each year."

The market and individual rationality have landed us in the former, and, in fact, we are accelerating further in that direction. As an individual, to choose the latter lifestyle is choosing to send your kids to a lesser quality school system, and what kind of parent would choose a vacation over ensuring a better life for their progeny? It's a trap! When we all choose the 4,000 house your child goes to the same school, you work more, and the money goes to real estate developers (and I doubt any more of them are employed, it's just the same lot who are working twice as hard as they used to, no job creation here). The rate of your property tax will go up anyway because sprawling developments strain the infrastructure (who pays to extend the grid, install plumbing and pave the road? It costs a lot more to do that than to cover the maintenance costs that were budgeted for).

The only mechanism to allow us to get what we want, (and which one do we want? the results of Landers, Rebitzer and Taylor, 1996, suggest the former picture) is strong progressive tax policy, ie a totally unprecedented move for the legislative process. we gotta lay down the law. I'm trying to figure out if we can attain that through a direct campaign for tax reform or if no rational tax reform will ever come out of our electoral structures.

Chilling: (Daly, Wilson and Vasdev 2001) "the degree to which resources are unequally distributed is a stronger determinant of lethal violence in modern nation states than is the average level of material welfare."

If we can't do it motivated by fairness and equity, then can we do it for material self-interest? If not that, then fear?(less)

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Mar 23, 2011

Mark rated it

Shelves: non-fiction, economics, sociology

This slim volume, based on lectures that economist Frank delivered at Berkeley, concisely sums up what has happened to the middle of the middle class as the rich have gotten richer, particularly over the last 15 years.

Frank is an expert on how our spending is influenced by those who are around us, and how the greatly increased consumption at the upper end of the income scale has filtered down to affect everything from the size of our houses to what makes for an acceptable car, TV ...more

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Jun 26, 2009

Derek rated it

Shelves: economics, social-issues, non-fiction, psychology

A nice little summation of the problem of relative inequality. Some might be bothered by the fact that it is drawing upon some psychological concepts, but it is important that we recognize the role which our minds play in our economic decisions; we as humans tend not to be particularly rational (or, as the title says in the rather popular book, we are "predictably irrational"). Frank makes a very sensible case that relative inequality leads to a consumption "arms race," which...more

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May 13, 2008

gaby rated it

Shelves: nonfiction

I almost didn't review this book. I could tell pretty early on that I wasn't going to have much to say about it, despite having had an extensive conversation about its substantive points well in advance of having actually read it. So I thought perhaps it might be best to forgo the sort of acerbic, non-plussed review I expected from myself. But when have I been known to leave well enough alone? So here we are.

I live in a bit of a self-chosen world of intellectual binaries. The thi...moreI almost didn't review this book. I could tell pretty early on that I wasn't going to have much to say about it, despite having had an extensive conversation about its substantive points well in advance of having actually read it. So I thought perhaps it might be best to forgo the sort of acerbic, non-plussed review I expected from myself. But when have I been known to leave well enough alone? So here we are.

I live in a bit of a self-chosen world of intellectual binaries. The things about which I spend almost all of my time thinking (music/fiction and The Law) are extremely dissimilar. Music and fiction set up little worlds, but they are worlds in which no answers are expected or even possible. The Law also provides an identifiable framework but supplies, in surprising measure, many answers (which I am expected, in surprising measure, to find).

There is a whole universe of murky area in between these two polar extremes - the seedy side of the Social Sciences. Disciplines that set up frameworks and provide the pretense of answers, but really they're just contextual minefields. And, while I don't claim to know much of anything about economics, I had always supposed that it was more in the Real Science camp than the Social Science camp. Maybe this is a misconception on my part - maybe my general Fear of Math has led me to overstate the objectivity of disciplines in which it is integral. In any case, Falling Behind seemed to me much more an exercise in subjective posturing than in Real Science Rooted in Numbers. The book is largely told in anecdote form - literally, Frank illustrates a cornerstone of his thesis by recounting the time his two sons, ages 7 and 10, fought over who had more orange juice in their glasses. Frank extrapolates from this anecdote a whole series of serious 'truths' about human nature and American economics, sprinkling his personal experiences with 'Darwinian' theory in what comes across as an attempt to siphon off some scientific legitimacy.

At another touching juncture, Frank recounts the cruel impact that 'going part-time' wrought on the psyche of his divorced male colleague at Cornell, who found that "instantly, women no longer wanted to date him". In a happy turn, Frank concludes that the negative social connotation associated with working part-time did not impact the quality of assignments he was given at work. This touched a particular nerve to me, since I've seen how 'going part-time' impacts professional women, and stunts the quality of their work assignments. Frank may have been trying to prove some deep economic theory, but this anecdote, along with many others, rang hollow, out of touch, and provided an extremely narrow account of a really huge issue.

In short, I expected a whole lot more facts and figures to back up the trends Frank purports to be tracking. His general theses make a certain amount of sense, but don't seem adequately rooted in proof. I'm not a Cornell professor to be sure, but I certainly wouldn't have dared turn in a paper with that few citations in law school.

A quick glance on goodreads shows that no one that has read this book has given it less than 4 stars. I can totally accept that I just didn't "get it". And now I'm going back to fiction.(less)

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Jun 24, 2008

Alex rated it

Shelves: food-for-thought, greening, non-fiction

Excellent book. An economist goes into the problems of our current economic outlook on America's 'wealth' to wit while we are all doing better than in years past, the large income disparity between the very rich and middle class has a startling effect of raising the basic standards of living to a point where in order to maintain the things most people desire, the middle class has to pay disportionately more than in years past.

I'm not an economist and it's difficult for me to expla...more

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May 29, 2008

Gloria rated it

Recommended to Gloria by: NYTimes Sunday Book Review

A short, concise book; I found it helpful in terms of learning some of the terminology that economists employ (e.g. positional versus non positional). Highly accessible in general.

I thought it was interesting that he believed (and I think he is right if he is speaking of rapid adjustments) that the voluntary simplicity movement will only go so far (and generally addresses a specific economic class that has the "luxury" of simplicity---note that those are my words, not his);...more

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Aug 03, 2008

Jim rated it

frank cleanly lays out his reasons why 30-years of marked increases in income inequality harm the middle class. a brief, but well-reasoned and well-documented argument that points primarily to factors not addressed by the mass of the neoclassical economics community - chiefly, the consequences of consumption behavior being driven by the relative ranking of goods as opposed to their absolute value. an important set of observations with significant explanatory force.

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Jan 25, 2008

Henry rated it

Very interesting and highly persuasive. His comments about classic economic models ignoring contaxt completely staggered me and the early part of his theory appeared to me so obviously right that it's a wonder that its in dispute. It makes you wonder what else our economic models are missing. His theory becomes a little extruded by the end as if he's putting too much weight behind his earlier ideas that they cant really bear.

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Jun 19, 2011

Marks54 rated it

· review of another edition

This was a short summary of some of the author's economic research combining income inequality, relational goods, and "winner take all" markets. It is very accessible, compared with the Econ journal articles and suggestive of some important policy areas where markets have not worked efficiently in recent years. It is very useful for policy discussions, such as on debt reduction policies.

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Dec 04, 2007

Mark rated it

Shelves: money

This was an interesting book to read right next to The Trap: Selling Out to Stay Afloat in Winner-Take-All America. Both deal with the shrinking of the middle class, and the rise in costs of housing, education, and healthcare, among other things. It's short, but dense in information, disspiriting as that info may be.

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Aug 14, 2007

Archie rated it

An average read. The ideas of a consumption tax, as presented, are quite interesting. Will definitely give me something to think about.

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About Robert H. Frank

Robert H. Frank is the Henrietta Johnson Louis Professor of Management and a Professor of Economics at Cornell University's S.C. Johnson Graduate School of Management. He contributes to the "Economic View" column, which appears every fifth Sunday in The New York Times.

More about Robert H. Frank...

Books by Robert H. Frank

The Economic Naturalist: In Search of Explanations for Everyday Enigmas

The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us

Luxury Fever: Money and Happiness in an Era of Excess

The Return of The Economic Naturalist: How Economics Helps Make Sense of Your World

The Darwin Economy: Liberty, Competition, and the Common Good

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