Monday, June 25, 2012

US Income Inequality: Real, Perceived, Desired

Michael Norton and Dan Ariely, by producing the graph below, have provided an interesting addition to the growing discussion of income inequality in the US.

The two columns on the left come from representative national samples of the American public.

The one on the far left shows the wealth distribution their respondents said would be ideal. In other words, in an idealized version of America, the public thought that the wealthiest 20% of the population (the purple bar) should control about 32% of the total wealth, the second and third quintiles (the blue and green bars) should control slightly more than than their proportionate 'share' (about 22% for each), while the poorest 40% of the population (the yellow and red bars) should control substantially less of the total wealth. In short, the American public embraces the concept of inequality of wealth, but not extreme wealth inequality.

The middle column captures American perceptions of how wealth is currently distributed. Clearly, Americans perceive the country as being more unequal than their 'ideal' distribution. They perceive the wealthiest 20% as having substantially more than ideal, the second 20% as having close to their ideal share and the bottom 60% having substantially less than ideal.

The column on the right shows the actual distribution of wealth in the United States, which is substantially more unequal than the perception. In sum, "respondents to his surveys universally think that wealth is more evenly distributed in the United States than it actually is—and what’s more, respondents say they would prefer for the wealth to be still more evenly spread around."

For more:  What We Know About Wealth


  1. I was a Sociologist by degree, but 40 years ago figured out that even then we were being led astray by liberal philosophy. You don't have to be very smart to understand that those with less always want more. Big hairy deal. They should work for it like the rest of us.

    1. "They should WORK for it" or they should have rich parents like most of the rich ones?

  2. Two points:
    1) Do people with less always want more? No, the desire for more is largely cultural. When US auto manufacturers initially moved plants to Mexico in the 60/70's they found they workers leaving in droves after only a few months. Because they could make as much in that time as they were used to making in the entire year. And they were happy with that and saw no reason to work beyond that point. The auto manufacturers solved the turnover problem by marketing various products to their workers -- in other words, by creating a culture desire for greater material consumption -- so they would have to continue working in order to afford those products.

    2) Do people have less because they don't work 'like the rest of us?' US inflation adjusted wages have been declining since the 70's at the same time that the average number of hours worked per week has increased. How do you square those two facts with your interpretation?

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