Trading Money For Job Satisfaction

Andrew Sullivan —  Jul 1 2011 @ 8:04am

Julian Sanchez imagines "how different types of people might respond to the same tax incentives differently":

As a writer and geek, I’m surrounded by folks who could probably be making a good deal more money doing something else, but have chosen journalism or activism or wonkery because they enjoy it, find it interesting and important, and so on. Many people without particularly expensive tastes just want to find intrinsically enjoyable work that will allow them to maintain a middle class standard of living—and if that threshold is met, cannot easily be induced to trade leisure time, or the non-economic rewards of the job, for even relatively substantial sums of money. Folks like this, in other words, are income satisficers for whom the marginal utility of an extra dollar drops off quickly once they have enough to afford some fixed set of amenities.

For folks like this, the conventional prediction about the effects of taxation may be quite reversed: Since they are highly motivated to achieve some relatively fixed acceptable income level (assuming the cost of sustaining their lifestyle remains constant), but their interest in money past that point drops off sharply, raising taxes may actually cause them to increase effort or productivity in order to keep hitting the same target they achieved with less work at the lower rate.

He later compares these taxpayers to Americans of higher and lower economic classes. Thoreau makes related points.