Jonathan Chait

Delusions Of Egalitarianism

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One of the oddities of the explosition of income inequality over the last few decades is that most people have no idea how far it's gone. Obviously, most people have a dim understanding of statistics to begin with. But they wish the country were dramatically more equal than it is, and it's a lot more unequal than they think. James Fallows:

A creative way to demonstrate that is with a forthcoming paper by Michael Norton of Harvard Business School and Daniel Ariely of Duke, which compares: (a) how wealth actually is distributed in America; (b) how people think it's distributed; and (c) how they think it should be distributed. The paper is available in PDF here.

The chart below conveys the central point: people think the distribution of wealth is more equal than it actually is; and they think it should be much more equal than their already unrealistically-equal notion of its current state. Eg: the top 20% of the US wealth distribution actually controls nearly 85% of total wealth; people think the top 20% controls under 60%; and they think it should control just over 30%

WealthDistrib.png

Similarly: people feel that the bottom 20% of the economic pyramid "should" have about 10% of the total pie; they think it actually has about 3% or 4%; in fact, its share appears to be too small to show up on the chart.

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