Remarkable Study/Graph: Americans Have NO Idea That Wealth Distribution Is As Concentrated As It Is

[kpete]

Do Americans know their country's wealth distribution?
(From: Wealth, Income, and Power
by G. William Domhoff)

A remarkable study (Norton & Ariely, 2010) reveals that Americans have no idea that the wealth distribution (defined for them in terms of "net worth&quot is as concentrated as it is. When shown three pie charts representing possible wealth distributions, 90% or more of the 5,522 respondents -- whatever their gender, age, income level, or party affiliation -- thought that the American wealth distribution most resembled one in which the top 20% has about 60% of the wealth. In fact, of course, the top 20% control about 85% of the wealth (refer back to Table 2 and Figure 1 in this document for a more detailed breakdown of the numbers).

Even more striking, they did not come close on the amount of wealth held by the bottom 40% of the population. It's a number I haven't even mentioned so far, and it's shocking: the lowest two quintiles hold just 0.3% of the wealth in the United States. Most people in the survey guessed the figure to be between 8% and 10%, and two dozen academic economists got it wrong too, by guessing about 2% -- seven times too high. Those surveyed did have it about right for what the 20% in the middle have; it's at the top and the bottom that they don't have any idea of what's going on.

Americans from all walks of life were also united in their vision of what the "ideal" wealth distribution would be, which may come as an even bigger surprise than their shared misinformation on the actual wealth distribution. They said that the ideal wealth distribution would be one in which the top 20% owned between 30 and 40 percent of the privately held wealth, which is a far cry from the 85 percent that the top 20% actually own. They also said that the bottom 40% -- that's 120 million Americans -- should have between 25% and 30%, not the mere 8% to 10% they thought this group had, and far above the 0.3% they actually had. In fact, there's no country in the world that has a wealth distribution close to what Americans think is ideal when it comes to fairness. So maybe Americans are much more egalitarian than most of them realize about each other, at least in principle and before the rat race begins.

(Figure 4, reproduced with permission from Norton & Ariely's article in Perspectives on Psychological Science, shows the actual wealth distribution, along with the survey respondents' estimated and ideal distributions, in graphic form.)


Figure 4: The actual United States wealth distribution plotted against the estimated and ideal distributions



Much more, lots of amazing graphs, wish I could post ALL:
http://www2.ucsc.edu/whorulesamerica/power/wealth.html

[RainDog]

1. Americans think they live in a more equal society than they do

This is the most important part of this study - other than showing the actual rates of inequality. So many have no idea how much some struggle and how much some hoard.

The only way we make the economic pie a little bit more equitable is by raising taxes on the wealthy.

That's the way to do it.

So, to refuse to do it would indicate someone is perfectly happy with what exists.

[pampango]

2. Generations of Horatio Alger, rags-to-riches fairy tales will take a long time to overcome.

But that is what must be done.

Nice find. Thanks for posting, kpete.

[Laelth]

3. k&r for exposure. n/t

-Laelth

[johnnyreb]

4. video, and couple notes:

'Cuz this report is really important. As noted at the bottom of the report:

First posted September 2005; most recently updated February 2013

This document's URL: http://whorulesamerica.net/power/wealth.html

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