Americans Are Horribly Misinformed About Who Has Money
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Re: Americans Are Horribly Misinformed About Who Has Money
#2What’s interesting here is the extent to which the public vastly overestimates the prosperity of lower-income Americans.
I bet this is due in large part to the availability of credit over the last few decades. Credit has allowed lower-income people to "play the part" of the wealthy, giving rise to the distortion. In particular, interest-only, 0% down mortgages, low or no-interest credit cards, and car leases let someone making $50,000 a year drive a Mercedes, live in a million-dollar house, and buy fancy toys like flat-screen TVs and Jet Skis. I think the vast majority of the public would base their perception of wealth on material possessions such as cars, houses, and boats rather than the amount of money in savings or investments. This could explain the discrepancy.
Re: Americans Are Horribly Misinformed About Who Has Money
#3The question they asked is difficult to interpret, i.e. hard to translate between specific answers "I think the top quintile possesses N% of wealth" and an intuitive understanding of how skewed (or not) a distribution we're talking about.
I have a strong quantitative background, and I have to do some calculations to interpret these numbers. And these guys are interviewing average Americans and inviting them to pull numbers out of their ass. Cognitive biases are going to skew these numbers horribly: people will sooner say 80% because it "sounds" like a much more "reasonable" answer than 99.8%, even if a little math would show that it wasn't.
For example, I'd like to see the study done again with people asked the mathematically almost-equivalent question: what do you think is the average wealth of the top (resp. second, etc.) quintile. (Almost-equivalent, because you have to tell the respondents the total amount of U.S. wealth for them to be able to convert one answer to the other.) Without that control I think the results are worthless.
Re: Americans Are Horribly Misinformed About Who Has Money
#4[deleted]
Re: Americans Are Horribly Misinformed About Who Has Money
#5Facts play a depressingly small part in politics and (perhaps even more depressingly so), studies/surveys and casual observations show that pointing out various facts to people does not actually change their opinions. Try talking about income inequality to a Tea Partier and you'll get the same reaction that an evangelical christian has to evolution. Moreover, this is certainly not an American phenomenon - I see it US politics, Canadian politics, and if I paid enough attention, I'd show up in European and other politics as well.
Re: Americans Are Horribly Misinformed About Who Has Money
#6I wouldn't be surprised if most respondents are answering as if the question were about income rather than wealth.
Re: Americans Are Horribly Misinformed About Who Has Money
#7Here's the original paper (featuring Comic Sans):
http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20pre...
Note that the survey was carried out five years ago, before the financial crisis.
Re: Americans Are Horribly Misinformed About Who Has Money
#8I'd like to see that graph broken down between people who think that wealth is a zero sum thing that can be represented as a pie (as shown) vs those who know it isn't.
That is, people who think that if I have a dollar, then they can't also have that same dollar at the same time.
Re: Americans Are Horribly Misinformed About Who Has Money
#9What’s interesting here is the extent to which the public vastly overestimates the prosperity of lower-income Americans. I bet this is due in large part to the availability of credit over the last few decades. Credit has allowed lower-income people to "play the part" of the wealthy, giving rise to the distortion. In particular, interest-only, 0% down mortgages, low or no-interest credit cards, and car leases let some…
Over the last 30 odd years, "wealthy" has gradually morphed from "compound interest" to "credit approved."
Re: Americans Are Horribly Misinformed About Who Has Money
#10Technology allows people to be much more productive than the mean and the weight of most productivity is naturally skewed toward a small minority.
This is not an injustice. A top programmer will be many times more productive than an average programmer and large codebases tend to include code from top programmers preferentially. Not only that, the value generated by top programmers (or project leader) is vastly more than that of an average programmer. This is why Google is paying their top people (technical, administrative) millions of dollars.
Compare that to a stone age hunter, who may have been 2-3 times more effective than an average hunter. A strong or a fast man is never much stronger or faster than an average man.