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Imagine two independent worlds, in one of which the wealthy are taxed more heavily than in the other. In the high-tax world, the wealthiest drivers buy Porsche 911 Turbos for $150,000 rather than $333,000 Ferrari F12 Berlinettas, the vehicle of choice of wealthy drivers in the low-tax world. But because the lowly Porsche includes every design feature that materially affects handling and performance, the absolute differences between these cars are minuscule. In both cases, drivers would take the same pride in owning the best car on the road. Available evidence suggests that even if all other features of the two worlds were exactly the same, it would be difficult to detect any measurable happiness differences between wealthy drivers in these environments. But of course other features would not be the same. Even if governments in both worlds were highly wasteful, at least some of the extra revenue in the high-tax world would go for public investment, including better road maintenance. So the real question is this: βWho is happier, someone who drives a $333,000 Ferrari on roads riddled with foot-deep potholes, or someone driving a $150,000 Porsche on well-maintained roads?
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Robert H. Frank (Under the Influence: Putting Peer Pressure to Work)