Americans Vastly Underestimate Wealth Inequality, Support 'More Equal Distribution Of Wealth': Study

Americans vastly underestimate the degree of wealth inequality in America, and we believe that the distribution should be far more equitable than it actually is, according to a new study.

Or, as the study's authors put it: "All demographic groups -- even those not usually associated with wealth redistribution such as Republicans and the wealthy -- desired a more equal distribution of wealth than the status quo."

The report (pdf) "Building a Better America -- One Wealth Quintile At A Time" by Dan Ariely of Duke University and Michael I. Norton of Harvard Business School (hat tip to Paul Kedrosky), shows that across ideological, economic and gender groups, Americans thought the richest 20 percent of our society controlled about 59 percent of the wealth, while the real number is closer to 84 percent.

More interesting than that, the report says, is that the respondents (a randomly selected 5,522-person sample, reflecting the country's ideological, economic and gender demographics, surveyed in December 2005) believed the top 20 percent should own only 32 percent of the wealth. Respondents with incomes over $100,000 per year had similar answers to those making less than $50,000. (The report has helpful, multi-colored charts.)

The respondents were presented with unlabeled pie charts representing the wealth distributions of the U.S., where the richest 20 percent controlled about 84 percent of wealth, and Sweden, where the top 20 percent only controlled 36 percent of wealth. Without knowing which country they were picking, 92 percent of respondents said they'd rather live in a country with Sweden's wealth distribution.

As the new Forbes billionaires list, released Wednesday, testifies, the richest Americans are getting richer, even as the country as a whole gets poorer. After 2005 income inequality continued to balloon.

READ the study:

norton ariely in press

Comments

[zingdaddy]

12:08 AM on 11/23/2010

Dan is the author of a fascinating book that I've recommended to others here: "Predictable Irrationality", studying how and why we do things that seem irrational but aren't.

[xxthcenturyboy]

04:14 PM on 10/14/2010

Evolutionary psychology actually explains this. Emotions toward wealth redistribution are instincts which come from our primitive brain that developed during our time as hunter-gatherers. As we've evolved into exchange-traders, which entails the division of labor, among other things, wealth redistribution emotions and efforts are quite incompatible with our current state of evolution. They're one of the many appendices of our minds.

[cavillor]

12:10 AM on 10/18/2010

Yes, the evolutionary trend toward specialization has created huge disparities in what sort of work is expected of different people with different faculties. Disparity of expectation underlies disparity in wages; indeed, the disparity between the salaried class and the hourly-wage class is one of many relevant dichotomies. To call the desire for a more equitable society where everyone has the chance to live a nice life a mere "appendi[x] of our minds" is a bit swift of a dismissal. I would chalk up the difference in graph preference to the pleasing nearer-symmetry of the more evenly divided pie.

[cavillor]

12:10 AM on 10/18/2010

Meant to italicize the "nice" for emphasis.

[Matrix1984]

04:29 PM on 10/11/2010

Americans make the right choices when presented with the facts. The only problem is truth and facts are hard to find.

The link that I clicked included a very different picture of ABBA. Seriously, it's a risque photo and...well its ALMOST NSFW...its just a different image for ABBA.
http://www.therandirhodesshow.com/pages/rrnews.html?feed=393046&article=7685802

[amacd]

07:59 PM on 10/07/2010

Don't know if you guys keep such stats, but It loks to me like this may be the most commented article on Huffington Post.

I've been writing about this stuff for years --- and the correlation between GINI Income/wealth Inequality and EMPIRE--- sort of proves that we live under Empire.

http://www.opednews.com/a/32269?show=votes#allcomments

Nice to see this economic oppression of all but the elite by empire finally getting so much attention.

Maybe we'll see more attention to the ruling-elite global corporate/financial/militarist EMPIRE that hides behind the facade of its Two-Party Vichy sham of democratic government (and the Vichy media) ---- which is the singular cancerous cause of such obscene economic inequality.

Alan MacDonald
Sanford, Maine

[Carl Keg]

04:42 PM on 10/04/2010

It's funny, I just asked my friend, that was born and raised in Sweden whether he agreed with the sentiments of this article. Here is what he said:

"sure its fair in sweden.. everyone has the same misery, and the ones with money and ambision leave the country"

[SarahhJ]

04:20 PM on 10/08/2010

Sweden is a developed country taking care of their own. They do not bet on interests where they would have to invade another country.
US being the one of the wealthiest countries in the world, it shouldn't be #37 in healthcare. Rethug you should be ashamed.

Sarah James
Interior Decorating Ideas
http://www.decordesigns.net

[seriouslyoverit]

07:25 PM on 10/09/2010

It's funny, because I just asked myself, born and raised (and still living in Sweden) whether I agreed with the statements of this article. Here's what I said:

"Sure it's fair in Sweden. Everyone can basically afford the same thing, which means I do not have to walk down the street feeling inferior to anyone, or wishing I could have what they have. It's a lot easier to be content when we're all pretty much on the same level. It also helps not to have to worry about healthcare or education."

As far as the whole money and ambision[sic]. Why much one's ambition be to make a lot of money? Why would you need to make a lot of money, if you have a system that takes care of you (meaning: you don't have to pay $3000 for a ride in an ambulance, or $20000 for a somewhat decent education)? I'm just saying. When you aren't forced to pay for everything that'll make you feel safe, out of pocket, suddenly the need to have wast amounts of money subsides.

Or maybe I'm just one of those crazy liberal hippies who really couldn't care less about "being rich"?

[Jorge Montijo]

07:45 PM on 09/29/2010

Greedy capitalism!

[Rogelio Rodriguez]

05:02 PM on 09/30/2010

Ha, You don't even realize what the study is implying. All the demographics would like to see an even distribution of wealth.

Question is how many people are willing to find a way to get a bigger piece of the pie. Would you rather people start getting more in their paycheck than what they have earned?

Since 80% of us do not put in the work and effort to get a bigger slice the other 20% ends up with no competition.

It takes people who don't care about how the odds are stacked against them. It takes people who want to give people a better product or service. It takes people who are willing to keep at it even when conditions start getting tough. It takes people who are willing to stick to it for the long haul.
Since most of us only want enough to pay our bills. That is all we are going to aim for.

[Kenz300]

06:33 PM on 09/29/2010

This country was built on a strong middle class.

We are turning into a third world country with the top 3% of the people
in the country having most of the wealth.

We used to think that was a problem in other countries.

Now it's greed is good......

Democrats are working to save the shrinking middle class.

Republicans are working to save their campaign contributions.

Average working people need to wake up and look at which party really
supports them and which party is working for the big corporations and
billionaires.

Democrats needs to speak up and not let their voices be drowned out by
the shrill, intolerant voices of the right.

[Rogelio Rodriguez]

05:19 PM on 09/30/2010

Your ignorance is mind boggling. This country was built by the poor who had enough of England. Poor people led by the rich people of the time such as Washington, Jefferson and the like.

This country became powerful because we provided goods that could not be produce in a war ravaged Europe. Our wealth was strong armed off the backs of poor Europeans who had to rebuild their countries with our machinery. Why do you think Caterpillar is a growing/recovering company? There was no large middle class until after world war II. We are not turning into a 3rd world country we are reverting.

Unless the dems and reps find away help make the US a producer of good for the world we will continue to falter. If you want the government to control all sectors of the economy you might as well fly over to cuba or china.

Oh wait cuba is still in a rut and China is adopting capitalistic functions!

[rnotrtoo]

03:35 PM on 10/09/2010

Hmmm. That wonderful Chinese formula for a fast growing economy. One that devalues their currency, takes advantage of a depressed and oppressed working class and a small group of privileged wealthy business class and smaller group of entrepreneurs. Somewhat similar to the U.S. in the latter part of the 19th century.

We know that neither one of our two political parties is averse to protecting their source of contributions. Although, in present times, those in the Republican Party get more and more bold and public that they are with out a doubt the party whose sole interest is to protect that top 1% of wage earners, and far too many Dems think that way as well.

As far as being a "producer of good to the world", I think we tossed away any hint of doing that in the past 9 yrs., and no one, at least no American, has ever suggested that the government control all sectors of the economy. Far greater than the Fortune 500 companies and their masters would destroy this country before some nut were ever to attempt to do something that approached socializing our industries.

[JohnBryansFontaine]

05:33 PM on 09/29/2010

The United States of Inequality
Trying to understand income inequality, the most profound change in American society in your lifetime.
By Timothy Noah

http://www.slate.com/id/2267157/

[anticapitalist1983]

05:26 PM on 09/28/2010

what a great, simple, elegant study!

the US seems to be like the titanic, a sinking ship.
or like the romans, a dying empire.

i think it might make more sense to MOVE to sweden then stay here and bang my head against a wall trying to make the US more like sweden (even if it is what we all want, it seems impossible to get it when the richest and the corporations among us have control of the government and hence the vast security and repressive apparatuses the state has built up, especially post-9/11)?

[TClaudiusDrusus]

08:38 PM on 09/26/2010

Memo to voters: Surprise! You've been a victim of class warfare for about the last 30 years.

And now all the folks who've been sticking it to you all that time are going to use their increased wealth and influence to make sure they can keep right on going. Woohoo!

Next time you hear one of them making fun of the people trying to give their fellow citizens a hand, calling them "socialist" or telling them to "get a job", ask yourself where you were when they were setting up their cozy little roost, and what, if anything, you're going to do about it in the next election.

[cschoenen]

09:34 AM on 09/27/2010

Yea! Cause those that gained there wealth didn't earn it so why should you....amazing that people can so pissed at others who bust their @ss for their money then are expected to give it away to those that dont want to work hard and just "expect" or think they deserve it?....how does that make sense?
I dont make a lot of money but I sure as hell dont expect anyone to pay my way....

[TClaudiusDrusus]

01:20 PM on 09/27/2010

Let's start with how the federal government works. Essentially, through a complex process, there's a decision about how much we want to spend on various items. The largest of these, apart from health care for the elderly and social security (an insurance program), is military, but it would include things like highways, for example.

With that amount in mind, the question arises how it will be paid for. For most of the 20th Century, the tax burden has been graduated, with those making more money paying a greater percentage of income. That's because as you make less money, the same percentage of your remaining income, after bills, is harder to afford. During and following WWII, up to about the mid 70s, there was a consensus around this structure. Thereafter, accelerating dramatically in 1980 and beyond, this changed as taxes were diminished for the most affluent Americans. At the time, it was argued that this would lead to increased government revenue to make up the shortfall; this proved incorrect. In fact, it led to massive deficits and greater private wealth at the top. At the same time, income from stock ownership has been favored, further diminishing taxes and increasing wealth at the top.

Adding to this, deregulation in certain sectors, largely unrestricted open trade and ever more expensive education (among other factors) have shifted income and wealth upward and diminished social mobility in the US. These are conscious policy choices that affect you and will affect your children and grandchildren. Enjoy.

[TClaudiusDrusus]

01:28 PM on 09/27/2010

Here are some graphical charts that illustrate the issue:

http://www.slate.com/id/2266174/

http://www.thenation.com/image/extreme-inequality-chart

Note the Slate presentation is a series, with navigation at the bottom of the page.

[leeman79]

05:32 PM on 09/26/2010

There will be pockets of wealth safely guarded by a series of checkpoints connected by gauntlets of uninhabitable wasteland and tent cities.

[david c taylor]

05:20 PM on 09/26/2010

The gini coefficient for the US is .4669, which is pretty high in comparrison to Europe. But that's what happens in capitalism, especially when you have a consumer-based economy. The way I see it, some inequality is just opportunity to take where I came from (the bottom) and continue to work my way to the top.

That being said, bad wealth distribution is a sign of future problems in the economy. The gini coefficient has increased by about .08 since the 70's...

[amacd]

08:23 AM on 10/07/2010

David, the GINI you quote is for Coefficient of INCOME Inequality (not Wealth Inequality, which is much higher as this paper suggests)

However, Saying that the GINI of Income Inequality is "pretty high in comaprison to Europe" is pretty much an understatement ---- it's more like "off the charts" compared to any 'functional democracy' -- it's very close to Robert Mugabe's plutocratic dictatorship of Zimbabwe (0.53) and above both the fromer Soviet 'evil' Empire (now Russia) and Communist China, and it is well above the level (0.45) at which 'our own' (sic) CIA uses to determine if a society is about to go into civil unrest and open rebellion.

Of course, nothing of the type (ie rebellion) is in the wind in the US because (as the study shows) the American people are ill-informed. What this Harvard study does not show or even hint is the implication that the only way a society could accept this level of inequality and economic oppression is if a ruling-elite global corporate/financial/militarist EMPIRE guilefully controlled the country by hiding behind the facade of their Two-Party Vichy sham of faux democratic government (with the aid of an equally Vichy corporatist media) ---- which is the reality of America today!

Alan MacDonald
Sanford, Maine

[Richard Schmoyer]

03:34 PM on 09/26/2010

A fewbillionaires aree working with Karl Rove to finance an election blitz against anyone who does not support growing income disparit. Bllionaire financed ads that will paint anybody who tries to increase taxes as "radical socialists".
Sadly many people most harmed by this will vote for the billioniare's candidates This will mean years of America's wealthiest enjoying the lowest maiximum tax rate since the 1920's, while the government will borrow billions more from Commmunist China to pay for it. They will tell americans that the only way out of "debt" is to maintian a second rate health system, reduce social security and medicare, privitize veterans medical care, and make higher education even more unaffordable to Americn citizens This will be done so that the richest can enjoy 35 percent tax rate, the lowest since the "roaring twenties" .This,of course is the maximum rate before their well healed accountants and lawyers bring the actual tax that they pay down to near zero.

[allocater]

02:51 PM on 09/26/2010

how does it work that in Sweden the richest have 18% and the upper middle class has 36% (middle class: 15% poor: 21% very poor: 11%)? wouldn't that make the upper middle class the rich and the rich the upper middle class? and the poor the middle class and the middle class the poor?

[NormalAmericanMan]

09:05 PM on 09/26/2010

No. What chalkboard have you been reading?

[kmwilly]

07:19 AM on 09/26/2010

To those who think wealth isn't equally distributed: "Get a JOB!!!"

[Peggy Blanchard]

08:42 PM on 09/26/2010

Very easy to say, not at all simple to do--the jobs have to be out there in order for people to be hired, and the jobs are not out there. Read the statistics.

[NormalAmericanMan]

09:06 PM on 09/26/2010

Your fan base agrees with you.