I have been a big fan of Daniel Kahneman and I have read a lot of his work related to Risk. His new book is titled “Thinking, Fast and Slow” is on my immediate reading list. Again, the first skim through it reveals a brilliant analysis and simple prose to explain complicated stuff. How I wish all academic writers did that? This post by Greg Mankiw referring to the work of Bryan Caplan where he argues that differences in greed (or “materialism” or “orientation toward money” if you prefer) have a big effect on income. Daniel Kahneman’s book gives data to back up that argument. In more simple terms that difference in people’s incomes is due to the fact that some people care more about having a high income than others and the heterogeneity is an important input into policies that are targeting income redistribution or taxation.

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