"A man earning $500,000 a year is not usually 10 times as happy as a man earning $50,000 a year."
Perhaps not. Who knows, really, given that interpersonal comparisons and the very measurement of happiness are fraught with all sorts of problems? I myself would prefer to cry in a Rolls-Royce if cry I must, actually, but I get the point Cowen is trying to make: Money may not make you happier, so no need to envy the rich or to worry about income inequality.
Funnily enough, Cowen's argument also works in the opposite direction: If increasing income produces smaller and smaller increases in happiness overall happiness might be maximized by reducing income inequality. Think of it this way: Suppose that we make the man earning $500,000 a year give $10,000 of this to the man who makes only $50,000 a year. Given Cowen's happiness thesis, the loss of this amount to the richer man won't make him much unhappier, but the gain of the amount to the poorer man might make him dance on the table with joyful singing heard in the background. A net increase in happiness!
I'd like to postulate a corollary to his response: if hard work results in more income (as it always does in the minds of righties), wouldn't people be much happier if they only exerted minimum effort on the job? You know, be less productive since it won't result in a happier life.
It's remarkable how much of the American right's effort goes toward dreaming up absurd rationalizations for why more Americans should be pleased to get a smaller piece of the pie-- and no health insurance. This rates up there the WSJ's infamous "Lucky Ducky" op-ed, which prompted one lower-class reader to write the editors with a generous offer-- if they'd like to swap for a month, they could live in his crappy apartment, subsist on a diet of beans, and earn so little money that they wouldn't have to pay income tax. For his part, he was more than willing to both take the pay raise and pay taxes on it with a smile on his face.