News The wealth gap - 92% of Americans surveyed prefer Sweden over the US

[Ivan Seeking]

Take the test
http://www.pbs.org/newshour/rundown/2011/08/wealth-how-does-the-us-slice-the-pie.html

PAUL SOLMAN: But as Dan Ariely found in part two of his study, and as our own informal survey confirmed, when people didn't know which countries the pie charts represented, they overwhelmingly chose the one representing a much more equal and yet still prosperous country, Sweden, as the place they'd prefer to live. A function of their politics, we wondered?

DAN ARIELY: We had 7,000 people distributed around the U.S., different levels of income, education, wealth, political opinions -- 92 percent of the Americans picked Sweden over the U.S. When we broke it by Democrats and Republicans, Democrat, it was 93 percent, Republican, it was 90.5 percent.

So there's a difference, but the difference is tiny...

Video and text
http://www.pbs.org/newshour/bb/business/july-dec11/makingsense_08-16.html

Hopefully my point is obvious. When faced with the facts in terms easy to understand, most Americans believe the distribution of wealth in the US is unfair and unbalanced. As Warren Buffet said, we need to quit coddling billionaires.

 

[russ_watters]

Hopefully my point is obvious. When faced with the facts in terms easy to understand, most Americans believe the distribution of wealth in the US is unfair and unbalanced.

I agree that most Americans believe the wealth distribution in the US is unfair and when they know nothing else but wealth distribution, they will pick a more equal one. So where does this take us? What's the point? From this information (particularly given the man-on-the-street interviews!) , *I* would conclude that this poll shows that Americans don't understand the concept and implications of wealth inequality. And I would not be at all surprised by that. What do you think it means?

As Warren Buffet said, we need to quit coddling billionaires.

What does the previous sentence have to do with this one? Why does that poll have anything to do with Buffet's quote and what exactly is meant by "coddling billionaires"? What specific course of action are you recommending based on the poll?

 

[apeiron]

Do you have anything more recent?

What? More recent than something published in July?

Or most recent raw figures? You can see these for example...

http://www.photius.com/rankings/economy/distribution_of_family_income_gini_index_2011_0.html

http://stats.oecd.org/Index.aspx?QueryId=26068

 

[Tosh5457]

Good find.

Argh Portugal is in 2nd, but we're coming for you USA!

Seriously, are policies to make social inequality very low moral? If I work a lot to get education and money, and my neighboor just sits on his couch watching TV all day, should we have the same income? What's the incentive to make an effort if I knoww that in the end I'll just end up equal to everybody else? What's best for the country in general is not always the best thing to do. Putting alfandegary taxes on many products may be good for the country, but would you like to not be able to buy the things you want from the internet, just because they come from other country?

Northern-european countries, not just Sweden, have a very low social inequality. But they have that because they're very responsible and moral people, or else there would be many people living off on the expenses of others and the system wouldn't take long to change. Needless to say, this would never work in USA. There would be too many people taking advantage of it, while others would be working for them to get benefits, like it happens today. And in the end those people would still complain they don't have enough opportunities, like it happens today.

But taxing more the riches (and not the median class) would be a good policy. Republicans would never allow it to go very far though.

 

[apeiron]

*I* would conclude that this poll shows that Americans don't understand the concept and implications of wealth inequality.

Now ain't that the truth.

But instead of derailing the thread by asking about remedies - how we should change things to create greater equality - first we have to be able to identify what is actually optimal.

As ever in a rational world, you start with the right target and work backwards from it. If you start worrying about the pain of making change, then you just will never change.

 

[apeiron]

If I work a lot to get education and money, and my neighboor just sits on his couch watching TV all day, should we have the same income?

Strawman arguments are not going to cut it. Let's have a grown-up conversation for a change.

Northern-european countries, not just Sweden, have a very low social inequality. But they have that because they're very responsible and moral people, or else there would be many people living off on the expenses of others and the system wouldn't take long to change. Needless to say, this would never work in USA. There would be too many people taking advantage of it, while others would be working for them to get benefits, like it happens today. And in the end those people would still complain they don't have enough opportunities, like it happens today.

If you read the research, the causation is the other way round.

 

[Tosh5457]

Strawman arguments are not going to cut it. Let's have a grown-up conversation for a change.

Ok, I can reformulate that for you. Shouldn't effort (which pays off in money) be rewarded? With a very low social inequality it certainly isn't, and the system is prone to abuses.

 

[daveb]

Northern-european countries, not just Sweden, have a very low social inequality. But they have that because they're very responsible and moral people, or else there would be many people living off on the expenses of others and the system wouldn't take long to change. Needless to say, this would never work in USA. There would be too many people taking advantage of it, while others would be working for them to get benefits, like it happens today. And in the end those people would still complain they don't have enough opportunities, like it happens today.

So the U.S. is full of immoral people...somehow, i can't formulate an valid argument against that.

 

[Tosh5457]

So the U.S. is full of immoral people...somehow, i can't formulate an valid argument against that.

That's a logical fallacy. I said responsability and morality can make a low inequality society work, and you're saying since in the USA there's a high inequality, americans aren't moral and responsible people. You can refute that conclusion you just said, but it has nothing to do with my reasoning...

 

[daveb]

Ah, I see you do not understand the power of sarcasm. My bad.

 

[Greg Bernhardt]

I hate when people compare us to Norway or Sweden. Impossible, because both have very small homogeneous populations. Scale them up 30x, inject them with diversity and let's see how smoothly it all runs.

Also when we talk about equality, are we talking about equal opportunity or equal results? I think some are talking about equal results, and that my friend is Communism.

 

[Tosh5457]

Ah, I see you do not understand the power of sarcasm. My bad.

Not when that sarcasm is poorly phrased and doesn't make sense in the context. My arguments don't have any logical fallacy, so your sarcasm doesn't make sense...

/offtopic

 

[Ivan Seeking]

Also when we talk about equality, are we talking about equal opportunity or equal results? I think some are talking about equal results, and that my friend is Communism.

You are assuming that the results are the product of equal opportunity. Given that we are on par with China where half the nation is impoverished peasants, perhaps the results suggest that opportunity is not so equal.

What I do know is that inequality of such proportions often leads to civil war, or a coup.

Consider the irony that our system should produce the same wealth distribution as China! How does that make Capitalism any better than Communism?

 

[Greg Bernhardt]

How does that make Capitalism any better than Communism?

The Chinese government may still be communist, but there is little doubt that it's the capitalistic reforms which drives it's economy.

Given that we are on par with China where half the nation is impoverished peasants, perhaps the results suggest that opportunity is not so equal.

What I do know is that inequality of such proportions often leads to civil war, or a coup.

What do you mean we are on par with China? Their GDP is 1/3 ours. Are you claiming a poor Chinese peasant has the same inherent opportunity as a poor inner city kid in the US?

A poor inner city kid has the same opportunity as a rich kid. The results more times than not will be different and you can debate the reasons why, but the opportunity is the same. Places like China or India (castes) this is not the case.

 

[ModusPwnd]

If wealth grows exponentially, one would expect that as everybody gets wealthier that the gap grows. But this is not indicative of anybody's standard of living going down.

 

[Mech_Engineer]

Given that we are on par with China where half the nation is impoverished peasants, perhaps the results suggest that opportunity is not so equal.

Do really expect us to take you at your word that in the US:

1. 50% of the population is "impoverished peasants."
2. US "peasants" are on-par with China's.

I lived in China for 5 years and know for a fact this is far from the truth. You'd better start providing proof of your claims.

What I do know is that inequality of such proportions often leads to civil war, or a coup.

You'd better provide proof of that too since it's probably bunk. Specifically, prove that wealth inequality leads to civil war and/or a government coup. What caused the last US civil war? Was it wealth inequality?

Consider the irony that our system should produce the same wealth distribution as China! How does that make Capitalism any better than Communism?

Consider the irony that you (as a moderator of a scientific forum which specifically prohibits making wild claims without proof) would even claim this without trying to provide some minimum level of data to back it up!

Please note the Per Capita GDP Comparison: http://www.wolframalpha.com/input/?i=USA+china

CIA World Factbook (China): https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html

 

[WhoWee]

You are assuming that the results are the product of equal opportunity. Given that we are on par with China where half the nation is impoverished peasants, perhaps the results suggest that opportunity is not so equal.

What I do know is that inequality of such proportions often leads to civil war, or a coup.

Consider the irony that our system should produce the same wealth distribution as China! How does that make Capitalism any better than Communism?

Who are the "impoverished peasants" in the US? From the White House web site.
http://www.whitehouse.gov/sites/default/files/101210-tax-relief-african-americans.pdf

[/I]"• An estimated 2.2 million African American families will benefit from the expansion
in the EITC and CTC that are extended in this agreement. These credits help roughly
4.7 million African American children or almost half (44%) of all African American
children.
• The extension of Unemployment Insurance will benefit 1.1 million African
Americans. That is why the National Congress of Black Women praised the President
for giving the unemployed a “new lease on life” and a “survival line” through the next 13
months.
Illustrative Example: Working African American mother with three children making $20,000.
This family will:
• Receive a tax cut of more than $2,100 from extending recent expansions in the EITC and
Child Tax Credit as part of this agreement.
• Receive a $400 tax cut from the new payroll tax cut.
• Compared to the Republican alternative, this family will receive a total tax benefit of
$2,500 next year. "[/I]

****
Next item:

"• 2.7 African American children will benefit from a larger CTC.
• For many families, extending the minimum threshold in the CTC will result in thousands
of dollars in additional tax benefits that would have otherwise been lost. For example:
o A married couple with three children making $23,000 will receive $3,000 in child
tax credits compared to about $1,540 if only the 2001/2003 tax cuts were
extended – an increase of about $1,460. o A single mother with two children making $17,000 will receive $2,000 in child
tax credits compared to about $640 if only the 2001/2003 tax cuts were extended
– an increase of about $1,360."

*****
Next item

"The American Opportunity Tax Credit in the Recovery Act:
• The Recovery Act expanded the AOTC so that it now provides up to three times more
relief than was previously available under the Hope Credit and Lifetime Learning Credit
and is refundable for low-income students for the first time.
• The AOTC gives working families and students a $2,500 per year partially refundable tax
credit to help students and their families cover the cost of college tuition. "

*****
Next item

"The agreement secures an extension of unemployment insurance for an additional 13 months.
Without this extension, 330,600 African Americans looking for work would have lost their
benefits this month alone, and through the end of next year over 1.1 million unemployed African
Americans would have lost their benefits.
• Extending unemployment benefits provides crucial economic security to American
families. A recent report by the Council of Economic Advisers found that while 14
million people received federally supported unemployment insurance benefits through October 2010, an additional 26 million people living in their households benefitted
indirectly."

*****

Are we really on par with China Ivan - with regards to helping the "impoverished peasants" in the US?

 

[SamRoss]

Northern-european countries, not just Sweden, have a very low social inequality. But they have that because they're very responsible and moral people, or else there would be many people living off on the expenses of others and the system wouldn't take long to change. Needless to say, this would never work in USA. There would be too many people taking advantage of it, while others would be working for them to get benefits, like it happens today.

But taxing more the riches (and not the median class) would be a good policy. Republicans would never allow it to go very far though.

What is it, 99% of everyone's DNA is identical? People are basically the same wherever you go. Systems, on the other hand, are different. I don't see any reason to believe that whatever they're doing in Sweden wouldn't work in the US. Yes, let's tax the rich and let the Republicans go off in the corner and sulk.

 

[SamRoss]

I actually saw this before. It's not surprising. When you look at all the polls, people in this country really are more liberal than you would think. I just can't understand why they keep voting Republican.

 

[RudedawgCDN]

Ok, I can reformulate that for you. Shouldn't effort (which pays off in money) be rewarded? With a very low social inequality it certainly isn't, and the system is prone to abuses.

lol I have to chuckle whenever I see someone say "system is prone to abuses..."

Your whole tax system/code is "prone to abuses"

Your whole political system / government lobbying is "prone to abuses"

Your Wall Street and banking system is "prone to abuses"

The whole reason your economy is in the tank right now is because the American way of doing things...

It's just seems that when rich people, bankers and wall street snake oil salesmen abuse the system it's "business as usual" and they get a slap on the wrist - but when poor people try to "abuse the system" well... their leeches and their "ruining the country".

Somehow I think Wall Street Brokers did a lot more to cause this last recession than some guy in Las Vegas living on unemployment.

 

[mege]

Maybe this is a bit too sophist, but why is perfect wealth equality good? Other than jealousy, why would you want someone else to live a lesser life than they do?

You could probably use the 'US distribution' graph to show where wealth is located in the world, with the US being the big yellow slice. Maybe that means that the US should impoversh itself to be more equal with the developing countries of the world?

And I agree with RudedawgCDN on his last point. I wonder though, where did all that Wall Street money go politically? Let us not forget that it was the social policy driven public-private housing loan mashups that likely caused the recession and made some of these Wall Street folks rich.

 

[apeiron]

Maybe this is a bit too sophist, but why is perfect wealth equality good? Other than jealousy, why would you want someone else to live a lesser life than they do?

Who is saying it's good, or ideal? The OP clearly didn't. It just stated that a Swedish level of inequality looked better than the US.

To suggest that this is people arguing for exact equality, as several have now done, is plain misdirection.

Again, it seems trivial to start with the assumption that some level of wealth inequality is going to be optimal. There has to be some competitive basis, some motivational basis, to a society. And even if not, people are still born different and it is implausible that their fates would then be made identical. The interesting question then is what level should a society target? What is the model?

And if Sweden/the Scandinavian model has top scores for national happiness, health and other desirable outcomes, then why not examine what they do?

It could be just luck or something nothing to do with socio-economics. Or it could be that some socio-economic structures deliver better outcomes.

Can't see why this is such a touchy subject for PF.

 

[CAC1001]

Any free society is always going to have wealth inequality, and probably a high amount of it. the kind of wealth inequality that leads to civil wars or rebellions I'd say is what happened with Russia, where you had a rich class of people literally living off of the labor and lives of everyone else.

Wealth inequality in a modern market capitalist-based society is a little different. We do not have a fixed class of wealthy people in this country, and what wealthy we do have do not live off of the labor of everyone else. Everyone's level of wealth increases over time as well, even if there is a high level of wealth inequality.

A person in 2011 is one heck of a lot wealthier than a person in 1911, for example. One-hundred years from now, there will still be massive wealth inequality, probably by then trillionaires, but even if so, a "poor" welfare recipient one-hundred years from now will probably enjoy goodies that even a wealthy person today could only dream about.

 

[ThomasT]

Hopefully my point is obvious. When faced with the facts in terms easy to understand, most Americans believe the distribution of wealth in the US is unfair and unbalanced. As Warren Buffet said, we need to quit coddling billionaires.

Hmmm, well there's always going to be an imbalance of wealth as long as there's an imbalance of abilities among people. I don't have any particular problem with this, and considering that the 'poor' in the US live quite comfortably compared to the 'poor' in much of the rest of the world, then I don't think that we (I'm a US citizen and resident) are going to have worry, in the foreseeable future, about coups or revolutions in the US based on economic inequality.

Life and living isn't a matter of 'fairness' and I should think that most contemplative people realize this and so aren't unduly concerned about the distribution of wealth.

Of course it seems like a good thing to aim toward equality of justice and opportunity for all people. At least as far as egalitarians are concerned. But, whether this is a reasonable goal is an arguable point, and it certainly doesn't seem like a realistic one.

And so our world has a rather small percentage of wealthy people and a rather large percentage of people who live in poverty and suffering and who will die early because of that poverty, and a much larger percentage, the predominant percentage, who are somewhere in the midde of those extremes. The human 'herd' is sort of naturally culled in this way depending upon abilities and accidents of birth regardless of political or economic systems.

The US 'system' (due to an abundant wealth of natural resources, the fostering and rewarding of innovation, strong central/federal governmental control, the building and maintenance of necessary infrastructure and a more or less homogeneous national culture) has been particularly effective in that it has lulled at least half of the electorate into complacency or apathy via a rather high average standard of living (ie., we are, most of us, pretty comfortable).

But the US is changing. It's regressing. And I predict that by, say, 2100 it will be more like the 'third world', 'developing' countries of today than the US of, say, the 1970's.

And so, I believe, the US is on track to become progressively less egalitarian.

But I'll be dead long before then, and I would much rather live in Florida in the US of today than in Sweden. It gets really cold in Sweden, doesn't it?

 

[TheStatutoryApe]

I am wondering how much of the lack of wealth disparity in Sweden may be a sort of geographic slight of hand. They import quite a bit from outside their country. How many major corporations sell products in Sweden? How many of those products are made in Sweden? and How many of the CEO's and big money makers in those corporations actually live in Sweden?

I only found some rather general import/export statistics. Since they have the least economic disparity most any country they trade with will have greater economic disparity. A list of their principle trade partners lists all first world countries, including the US, but one might wonder just how much of the products imported via trade with these countries are actually produced in said country. Are such statistics usually corrected for this? or based only on product which comes directly from the particular country to begin with?

Looking for specific examples I found that there is a Coca Cola bottling plant in Sweden but that it is owned by a corporation, "Coca Cola Enterprises", located in the US. So Sweden gets its product and some blue collar jobs but the higher earners of the corporation we would assume live and work in the US with much lower personal income tax burdens. Even if the bottling company in Sweden is subject to taxes the corporate tax rate there is actually lower than the US. Coca Cola Enterprises is also sole distributor for several European countries and the product produced in Sweden is likely exported to some of those countries producing yet more profit for an American corporation off of Swedish labour.

 

[Jimmy Snyder]

One reason that the lowest 20% have so little wealth is that the govt requires that you can't have more than $2000 (that's an old number, I don't know the current amount) in assets and still receive welfare. In my opinion, the next 20% own so little because if they had $1 they would use it as collateral to borrow $2. They don't have assets because they won't have assets.

 

[russ_watters]

I actually saw this before. It's not surprising. When you look at all the polls, people in this country really are more liberal than you would think. I just can't understand why they keep voting Republican.

Since clearly those polled didnt understand the concept they were being asked about, perhaps it is telling us that people are only liberal about things they don't understand?

 

[russ_watters]

One reason that the lowest 20% have so little wealth is that the govt requires that you can't have more than $2000 (that's an old number, I don't know the current amount) in assets and still receive welfare. In my opinion, the next 20% own so little because if they had $1 they would use it as collateral to borrow $2. They don't have assets because they won't have assets.

Good point: I have a pretty high income, but I'm (sorta) young so I am heavily leveraged, with little net worth. So am I rich or poor?

"Wealth" is a pretty flawed measure of wealth.

(Edit: it seems the two are being mixed together in this thread...)

 

[daveb]

Since clearly those polled didnt understand the concept they were being asked about, perhaps it is telling us that people are only liberal about things they don't understand?

Well, since he didn't provide any source, I take what he said with a grain of salt. However, even if he is correct, how can you justify that those polled "didn't understand the concept"? Correct me if I'm wrong, but it seems you're saying that only conservatives understand the concepts.

 

[daveb]

"Wealth" is a pretty flawed measure of wealth.

Agreed...by wealth standards, I'm dirt poor since I have a mortgage with negative equity (yeah, I'm one of those responsible idiots that won't walk away from a house that's worth less than what I owe). However, I wouldn't consider myself poor since I can afford the things I want.

 

[russ_watters]

It was a half tongue in cheek response to a flippant remark, dave.

But Ivan's link mentions a guy who picks the US as having an even wealth distribution. That guy just plain didn't understand the math behind the question.

 

[mheslep]

http://en.wikipedia.org/wiki/Demographics_of_Sweden#Sweden_census_2005" are commonly cited in gini/equality/poverty discussions about Scandinavia.* Find me a place as homogeneous in the US, or even just a bunch of Swedes in the US** and then let's talk.

Here are a few of Sweden's more recent socio-economic policies that I like, which I mention here because I doubt many Americans taking that survey would have associated them with Sweden, especially since the election of the center-right Reinfeldt government in 2006 which was re-elected in 2010.

• Universal grade school vouchers, established since 1992, allowing children to attend any school: public, private for profit, even religious.
• Partially privatized pension system
• Privatization of business. In process of selling off/privatizing state owned companies and assets, bringing in revenue in the process
• Taxes. Though the top income tax rate is still 57% to the US's 35%, taxes in Sweden are on the way down. Sweden has been sharply cutting income and business taxes, completely eliminating gift and inheritance taxes. Furthermore Swedish taxes are considerably flatter than the US system. Obviously the VAT tax is not progressive, but neither are the income taxes compared to the US. That is, there's less attempt at wealth transfer, instead people largely get back the same money they pay in (less govt overhead).
• Deregulated airlines, telecom, electricity.
• Cut public spending.
• Voted to stay out of the Eurozone monster.

*Edit: I note those Wiki demographics are a bit old, and that very recently 14% of the Swedish population is foreign born. We'll have to see how that effects the welfare state and equality.

 

[apeiron]

Since clearly those polled didnt understand the concept they were being asked about, perhaps it is telling us that people are only liberal about things they don't understand?

It would be more reasonable to say that they were being allowed to understand the long term consequences of short term choices - and didn't like what they saw.

 

[mheslep]

I hate when people compare us to Norway or Sweden. Impossible, because both have very small homogeneous populations. Scale them up 30x, inject them with diversity and let's see how smoothly it all runs.

That could roughly be called Europe. I doubt the wealth quintiles spread out quite so evenly between Luxemburg and Albania

 

[mheslep]

Lady Thatcher on the GAP, 1990.

https://www.youtube.com/watch?v=okHGCz6xxiw

They'd rawtha the gap were that. Down here. That. Not that. But that.

 

[Physics-Learner]

i did not read the full article. but the pie chart, in and of itself, can lead to some very poor conclusions.

the biggest one that comes to mind is in looking at the chart and concluding that the inequality has lots of people living in poverty like situations. or more so than the country with evenly distributed wealth.

what would need to be included is the spending power that an individual has. how many dollars does he have, and what can be purchased with these dollars ? in the same country, i would rather have $2 out of $1000, rather than $1 out of $100. i still have twice the purchasing power.

also the cost of goods and the availability of goods. in the past, i have talked to people coming back from communist russia. many things were not available for purchase at any cost.

because there are obvious mistakes that the majority of people will make when looking at the charts, it is obvious to me that the people involved in making the charts have ulterior motives.

but i have been telling you guys one thing now for a while - the very wealthy in this country run the country, and do so by using govt as its tool.

which is why i want to dismantle most of it. because most of it is just a tool for the wealthy to control the rest of us.

 

[mege]

Agreed...by wealth standards, I'm dirt poor since I have a mortgage with negative equity (yeah, I'm one of those responsible idiots that won't walk away from a house that's worth less than what I owe). However, I wouldn't consider myself poor since I can afford the things I want.

It was a half tongue in cheek response to a flippant remark, dave.

But Ivan's link mentions a guy who picks the US as having an even wealth distribution. That guy just plain didn't understand the math behind the question.

I think daveb has a point though - the numbers could be grossly skewed because of debt. How is 'wealth' calculated? Net worth? Assets not counting liabilities? I'm reminded of the Michael Moore statement a few months ago where he equated the 100 richest against the bottom half - that statement was later to be evaluated and used a net worth valuation if I remember right (including all liabilities). So of course someone making 50k/yr with a 150k mortgage is going to have a negative or very low net worth. Being in the red does not mean they're poor.

I don't think it's a secret that Americans like their credit cards and mortgages.

 

[Physics-Learner]

another thing that could skew the stats is the difference between average and mean.

the chart depicts the top 20% as having 84% of the wealth.

what would be interesting is to see what wealth the top 2-3 % of the population owns.

 

[apeiron]

i did not read the full article. but the pie chart, in and of itself, can lead to some very poor conclusions.

The PBS link is in fact misleading as the "US" graph is of wealth and the "Sweden" one is of income.

As a rule of thumb, wealth inequality is usually about double income inequality, so the charts themselves are comparing apples and oranges. Or at least oranges and mandarines.

If you want actual like for like, the top quintile owns 84% of the US, it owns 73% of Sweden.

The second quintile is 11% to 20%. So the bigger difference lies there.

And in both countries, the bottom two quintiles are in negative territory because what they own is debt.

The gini data I would focus on is income. Unfortunately, when I present that data, it gets deleted by people perhaps not too familiar with this area of research.

 

[Ivan Seeking]

another thing that could skew the stats is the difference between average and mean.

the chart depicts the top 20% as having 84% of the wealth.

what would be interesting is to see what wealth the top 2-3 % of the population owns.

There is very little data about the distribution of wealth in America. There is one source, the Survey of Consumer Finances, sponsored by the Federal Reserve Board, that does provide data from 1983.

These data suggest that wealth is concentrated in the hands of a small number of families. The wealthiest 1 percent of families owns roughly 34.3% of the nation's net worth, the top 10% of families owns over 71%, and the bottom 40% of the population owns way less than 1%..

http://www.faculty.fairfield.edu/faculty/hodgson/courses/so11/stratification/income&wealth.htm

[PLAIN]http://www.faculty.fairfield.edu/faculty/hodgson/courses/so11/stratification/Wealth2004.gif

 

[apeiron]

This is the more telling finding from the original study.

http://www.people.hbs.edu/mnorton/norton ariely.pdf

What is really surprising is that it didn't matter if those surveyed were rich or poor, republican or democrat. They all had about the same mistaken underestimate of wealth inequality in the US, and the same belief about what would be fair.

So 1) all folk felt that wealth should be much more evenly distributed in US society than they believed it to be. And 2) wealth is in fact far more unevenly distributed than they realize.

Is this another inconvenient truth?

 

[apeiron]

I don't think it's a secret that Americans like their credit cards and mortgages.

The recent consumer credit bubble is of course something that masked the true levels of income and wealth inequality in the US (and other credit junkie countries). The poor could borrow to buy big TVs, cars and homes. So their wealth was not zero but negative.

But it felt like they were rich for a while. They had the same toys as those who actually were rich. People could enjoy the illusion.

 

[WhoWee]

This is the more telling finding from the original study.

http://www.people.hbs.edu/mnorton/norton ariely.pdf

What is really surprising is that it didn't matter if those surveyed were rich or poor, republican or democrat. They all had about the same mistaken underestimate of wealth inequality in the US, and the same belief about what would be fair.

So 1) all folk felt that wealth should be much more evenly distributed in US society than they believed it to be. And 2) wealth is in fact far more unevenly distributed than they realize.

Is this another inconvenient truth?

Actually, the inconvenient truth has yet to be described in the charts. It's the value of benefits owned by/entitled to the the bottom 20%. Free or subsidized food, medical, housing, education, transportation, communication, and utilities all have a significant value. We can either label it income or capitalize the anticipated lifetime benefit (potentially $millions cradle to grave) - but it needs to be accounted for in a sincere discussion.

 

[russ_watters]

...the biggest one that comes to mind is in looking at the chart and concluding that the inequality has lots of people living in poverty like situations. or more so than the country with evenly distributed wealth.

Yes, these discussions tend to involve people playing fast-and-loose with the definition of poverty. The title of one of those pbs shows linked in the OP, for example, is "land of the free, home of the poor", which is either reckless or dishonest reporting from our public news source.

For income inequality to be a predictor of poverty requires a recursive definition that has poverty defined in terms of income inequality. Quite obviously, there is little or no real correlation with the dictionary/standard definition, as some of the main examples given in this thread show us: China's poverty rate is much higher than the US's, despite similar income inequality.

In addition, the US's poverty rate has been pretty stagnant, despite rising inequality and a sliding definition of "poor" that moves the poverty level up over time.

 

[russ_watters]

I think daveb has a point though - the numbers could be grossly skewed because of debt. How is 'wealth' calculated? Net worth?

Yes, net worth. Note, this is another example of sloppiness in the article linked by the OP: it mixes and matches wealth and income.

The PBS link is in fact misleading as the "US" graph is of wealth and the "Sweden" one is of income.

It's not clear to me, but in any case, that's part of what I was talking about (the commentators also sometimes mix them). The "Land of the free..." link, there is one chart that looks like the US's wealth distribution, but at the bottom of the page says:

In the pie charts used to illustrate this story, the middle pie chart represents the income distribution of Sweden.

...which may be referring to the "wealth quiz" link. If that's the case, then the poll asked about:

Country A, which was made-up/not possible.
Country B, which is Sweden's income distribution.
Country C, which is the US's wealth distribution.

If that's what the poll really was, it was just horrible. It's asking people to judge something, while purposely misleading them about what they are looking at! And this is purported to be a scholarly research article from a Harvard and Duke psychologists! Yikes!

 

[russ_watters]

What is really surprising is that it didn't matter if those surveyed were rich or poor, republican or democrat. They all had about the same mistaken underestimate of wealth inequality in the US, and the same belief about what would be fair.

So 1) all folk felt that wealth should be much more evenly distributed in US society than they believed it to be. And 2) wealth is in fact far more unevenly distributed than they realize.

Is this another inconvenient truth?

No, peoples' opinions about something they don't understand and is based on fantasy do not tell us anything useful about how a government/economic system should be set up.

If you surveyed all Americans and asked if they wish there were more lottery winners, pretty much everyone would say yes, including lottery winners. And that would tell us nothing of value, just as this poll tells us nothing of value.

 

[russ_watters]

The recent consumer credit bubble is of course something that masked the true levels of income and wealth inequality in the US (and other credit junkie countries). The poor could borrow to buy big TVs, cars and homes. So their wealth was not zero but negative.

But it felt like they were rich for a while*. They had the same toys as those who actually were rich. People could enjoy the illusion. [emphasis and asterisk added]

Isn't that what matters? The standard of living that one lives should define whether someone is "poor" or "rich", not their net balance sheet, right?

In particular, these stats will badly misrepresent young people because young people tend to carry more debt than older people. So a wealthy - in terms of lifestyle and earnings - young person could still end up being extremely poor on a "wealth" basis because of how much debt they carry.

*The way you word that implies that it will eventually disappear. But for young people who take on a lot of debt early in life, but have a high income, it doesn't disappear - they eventually pay off their debts and end up with a lot of wealth. Indeed, negative wealth would necessarily be proportional to earning potential, as only those with high earning potential are capable of carrying a high debt, and credit card companies and lenders - though they made a lot of mistakes in the past 15 years - aren't completely stupid.

 

[Jack21222]

A poor inner city kid has the same opportunity as a rich kid.

This is simply not true at all. Here is a brief list off of the top of my head of advantages rich kids have over poor inner city kids:

Access to better schools, public and private

Access to private tutors

Better nutrition and health care

Better neighborhoods with less crime.

More influential business contacts and potential employers

These factors do not paint a picture of "equal opportunity." It's like you're saying if I played you in chess without my queen, I'd have an equal opportunity to win. This is just absolute nonsense.

 

[WhoWee]

This is simply not true at all. Here is a brief list off of the top of my head of advantages rich kids have over poor inner city kids:

Access to better schools, public and private

Access to private tutors

Better nutrition and health care

Better neighborhoods with less crime.

More influential business contacts and potential employers

These factors do not paint a picture of "equal opportunity." It's like you're saying if I played you in chess without my queen, I'd have an equal opportunity to win. This is just absolute nonsense.

Let's assume you are correct - especially your last item "More influential business contacts and potential employers" - I keep asking the majic question now what? Even if all other variables (regardless of the cost) are made equal - you can't make one person like another person, play with another person, or want to share with another person. IMO - the more you try to force behavior - the more push-back you'll encounter.

 

[Jack21222]

Let's assume you are correct - especially your last item "More influential business contacts and potential employers" - I keep asking the majic question now what? Even if all other variables (regardless of the cost) are made equal - you can't make one person like another person, play with another person, or want to share with another person. IMO - the more you try to force behavior - the more push-back you'll encounter.

Did I, or anybody else in this thread, suggest "forcing the behavior" of "liking another person?" No? Then that's a straw man.

There is nothing that can be done. The playing field will ALWAYS be tilted in favor of the rich. It's impossible to give everybody exactly the same opportunity. But it's completely insane to claim that everybody currently has the same opportunity.

The best we can hope for is to make the playing field as level as reasonably practical.