Much has been written in various circles about Mike Norton and Dan Ariely's recent paper about American's thoughts about the distribution of wealth in America. This is the paper which showed the actual distribution of wealth, by wealth quintile (Line 1, below), and contrasted it with the estimates (odd-numbered columns) which Americans of various demographics made of the actual distribution of wealth, and then their ideal distribution of wealth (even-numbered columns). Here are the data, read from some unlabeled bar charts:
| Top 20% |
2nd 20% |
Middle 20% |
4th 20% |
Bottom 20% |
|||||||||||
| 1 |
Actual |
84% |
11% |
4% |
0.2% |
0.1% |
|||||||||
| demographic group: |
Est'd (1) |
Ideal (2) |
Est'd (3) |
Ideal (4) |
Est'd (5) |
Ideal (6) |
Est'd (7) |
Ideal (8) |
Est'd (9) |
Ideal (10) |
|||||
| 2 |
<$50K income |
58% |
30% | 20% | 22% | 12% | 22% | 7% |
15% | 3% |
12% |
||||
| 3 |
$50-100K income |
59% | 33% | 20% |
23% | 12% | 22% | 7% | 13% | 3% |
10% |
||||
| 4 |
>$100K income |
61% | 40% | 23% | 23% | 12% | 19% | 6% | 11% | 3% |
8% |
||||
| 5 |
Bush Voters |
56% |
35% |
21% |
23% |
13% |
20% |
6% |
13% |
3% |
9% |
||||
| 6 |
Kerry Voters |
62% |
30% |
19% |
22% |
12% |
21% |
5% |
15% | 3% |
12% |
||||
| 7 |
Women |
57% |
29% |
22% |
21% |
12% |
22% |
6% |
15% |
3% |
13% |
||||
| 8 |
Men |
60% |
35% |
20% |
22% |
10% |
21% |
6% |
13% |
3% |
9% |
||||
| 9 |
point range |
6 |
11 |
4 |
2 |
3 |
3 |
2 |
4 |
0 |
5 |
||||
|
Underscore represents the highest datum in the column; italics the lowest. Sample size: 5522 respondents. Results read from unlabeled bar graph. |
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Observations:
- The top 20% of wealth holders have 84% of the wealth (line 1, first column). The demographic making the highest estimate, Kerry voters, estimated their share at 62% (line 6, column 1), and their ideal was 30% (line 6, column 2); the demographic making the lowest estimate, Bush voters, thought the top 20% held 56% (l5, c1), and their ideal was 35% (l5, c2). Those with incomes over $100,000 had the highest average for "ideal share," at 40% (l4, c2) -- less than half the actual 84%!
- The second 20% of wealth holders have 11% of the wealth (line 1, second column). Estimates ranged rather narrowly, from 19% to 23% (column 3), and ideals ranged from 21% to 23% (column 4)!
- The remaining 60% of us actually have less than 5% of the wealth (line 1, third, fourth and fifth columns). Estimates of the combined wealth of these 3 quintiles ranged from 19% to 22%. And across demographic groups, the ideal for the bottom 60% of us ranged from 38% (among those with $100,000 or more in income) to 50% (among women).
The abstract says it pretty clearly:
Disagreements about the optimal level of wealth inequality underlie policy debates ranging from taxation to welfare. We attempt to insert the desires of “regular” Americans into these debates, by asking a nationally representative online panel to estimate the current distribution of wealth in the United States and to “build a better America” by constructing distributions with their ideal level of inequality.
- First, respondents dramatically underestimated the current level of wealth inequality.
- Second, respondents constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution.
- Most important from a policy perspective, we observed a surprising level of consensus: 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.
Here's their final paragraph (omitting references and reformatted a bit for legibility):
Given the consensus among disparate groups on the gap between an ideal distribution of wealth and the actual level of wealth inequality, why don’t more Americans -– especially those with low income -– advocate for greater redistribution of wealth?
- First, our results demonstrate that Americans appear to drastically underestimate the current level of wealth inequality, suggesting they may simply be unaware of the gap.
- Second, just as people have erroneous beliefs about the actual level of wealth inequality, they may also hold overly optimistic beliefs about opportunities for social mobility in the United States beliefs which in turn may drive support for unequal distributions of wealth.
- Third, despite the fact that conservatives and liberals in our sample agree that the current level of inequality far from ideal, public disagreements about the causes of that inequality may drown out this consensus.
- Finally, and more broadly, Americans exhibit a general disconnect between their attitudes towards economic inequality and their self-interest and public policy preferences, suggesting that even given increased awareness of the gap between ideal and actual wealth distributions, Americans may remain unlikely to advocate for policies that would narrow this gap.
It cheers me that professors at Harvard Business School and Duke University took on this subject. Clearly some of the largest donors to their institutions have reason to like the current structure just fine, thank you, and this analysis might not endear them to such donors. I hope the conversation they're suggesting will continue.
Those who want data on wealth distribution can explore the 3-part series in the "Pages" section at left.
And those who want to understand the structures that funnel our wealth into a relative few pockets, at the expense of the rest of us, can explore this blog, and particularly the pages on wealth concentration, income concentration, privilege (see links in the category "cloud" at left).
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