Wealth inequality misconceptions

By Carrie Wojcik

Many peoples’ perception of wealth is that it is not distributed evenly between various economic classes. Many see the ideal distribution as relatively even with a healthy middle class.

Harvard Associate Professor Michael I. Norton and a professor from Duke University, Dan Ariely, conducted a study which revealed the severity of the misconceptions Americans had regarding income.

In their study, they had Americans construct their ideal distribution of wealth and what they thought was the real distribution of wealth.  The study revealed Americans did not recognize how severe the gap between income groups actually is.

According to Norton and Ariely’s research article “Building a Better America- One Wealth Quintile at a Time,”  they used the following definition of wealth:

“Wealth, also known as net worth, is defined as the total value of everything someone owns minus any debt that he or she owes.  A person’s net worth includes his or her bank account savings plus the value of other things such as property, stocks, bonds, art, collections, etc., minus the value of things like loans and mortgages.”

Their study revealed that most Americans thought the wealthiest quintile held 59 percent of wealth. In reality, the actual percentage of wealth held by the wealthiest class is close to 84 percent.  The reality is, in comparison to the top 0.1 percent, the American middle class is suffering.

About 92 percent of Americans desire equal wealth distribution. According to Nortonand Ariely, this would be similar to the economic distribution in Sweden.

The research reflected that Americans desire some inequality before perfect equality among wealth distribution.

Republicans and Democrats alike agreed on an equal distribution with a slight inequality among different economic classes.

In “Building a Better America- One Wealth Quintile at a Time,” Norton and Ariely state, “…our results demonstrate that Americans appear to drastically underestimate the current level of wealth inquality, suggesting they may simply be unaware of the gap.”