By James Kwak
The chart below is from a short paper by Michael Norton and Dan Ariely (author of Predictably Irrational) (hat tip Huffington Post). The top line is the actual U.S.wealth distribution. The second is what Americans think the wealth distribution is. The bottom line is what Americans think the wealth distribution should be.
Yes, in the real world, the wealth held by the bottom two quintiles together simply vanishes on a chart like this.
It’s based on a survey done in 2005–before the financial crisis, and just about at the peak of housing boom-induced euphoria. The results are consistent across income groups, gender, and political affiliation. There are small differences, but they are swamped by the basic results.
There are two other great charts (including the U.S.-Sweden comparison), but in the interests of respecting fair use I’ll send you over there.
This is one of the themes brought up in Winner-Take-All Politics by Jacob Hacker and Paul Pierson. Americans really think that society should be considerably more equal than it is, and that attitude has not shifted appreciably during the past thirty years. Yet our political system produces policies that make America more and more unequal, predominantly by cutting taxes for the very rich. Hacker and Pierson’s point is that there has not been an ideological shift toward conservative positions in the country at large (at least not on this issue). Instead, it’s the game of politics that has changed, so policy has become more disassociated from the preferences of the people.