The biggest issue of the super rich? Not money - time
The main aim of the super rich is not to become even richer but to find some spare hours.
At least, that’s what Giacomo Corneo - professor Public Finance and Social Policy at the Berlin's Freie Universität – claims in his paper Time-Poor, Working, Super-Rich. And this study offers a whole new perspective on how the super-rich cope with their time on one hand and abilities on the other.
Not enough time to spend their earnings
‘Super-rich do not consume the entire amount of numeraire good they earn. This is not because they’re satiated - their marginal utility from consumption is strictly positive - but because they have not enough time to spend their earnings. They optimally leave some earnings unspent because they are not willing to forsake time of personally fulfilling work in order to consume more.’
Corneo argues that the rich - when they have accumulated a certain amount of power - eventually have a 'luxury-choice', although extra research on the relationship between time and money should be done, obviously.
Corneo: ‘If labor productivity keeps growing at a higher rate than the length of human life, over time an ever increasing share of the workforce may come to face a decision problem… For those future workers the key trade-offs will not be the one between less leisure and more commodities but between less time for personally rewarding work and more time for consumption activities.’
Time is more scarce than money
So, where does that leave Piketty’s theory in which a civil war is bound to happen if the economic mismanagement continues? And what about those rich folks getting richer and the poor poorer?
According to Corneo the rich won’t change a thing, not even when the taxes increase: ‘The model developed in this paper suggests that in such a future economy the incentive costs of taxing above-average incomes may be substantially lower than today. This would loosen to a great extent the restrictions on political redistribution that are today imposed by effiency considerations.'
Corneo relies on the charity-need of the rich: above a certain capacity providing becomes more important than collecting. Just like time becomes more scarce than money.
Robert Dur, professor at the Erasmus School of Economics is delighted. ‘This is beyond Piketty!’ he says to Quote Magazine. ‘Corneo provides a whole new insight on how the rich think about wealth.’
Dur finds it refreshing that Corneo adds new elements to the discussion like the time it takes to consume something and the pleasure people experience at work. And yes, why should the super-rich care about tax measures to skim their incomes and assets if they don’t have enough time to consume it anyway?
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