Americans wrong about income distributionFollow

No surprise there.

They also systematically underestimate the wealth the rich have.

Further, they all think about alike. Even when asked for the ideal distributions of wealth, they are very, very similar.

Link:

http://www.good.is/post/americans-are-horribly-misinformed-about-who-has-money/

Ergo: redistribution of wealth from taxes? Not only is that what we all *want*, it would mostly likely only lead to the world we already *think* we live in.

The result is fairly similar for any of the three.

Income is what you make in a year. I'm sure the graph is similar for income. Wealth includes the value of anything you own, such as cash, property, stocks, etc.

/facepalm

Imagining what it is like is not equal to how many of them there are :)

I get my information from facts, but if you prefer to just make crap up, I guess you have a reputation to uphold here.

Part of what keeps this place the assylum :)

Except that the chart is comparing assumptions about how much "wealth" the rich have versus how much people think they have. The conclusion that a discrepancy between those is because most Americans are overestimating how much wealth poor people have seems unsupported.

The comparison of "how many there are" is somewhat irrelevant. The numbers are broken up into quintiles. The conclusion I disagreed with wasn't that people didn't realize how many people are "poor", but that they thought that poor people had more relative wealth. Which I find completely absurd.



I wasn't disputing the facts. I was questioning a conclusion about those facts. There is nothing in that study which says *why* people think that the distribution is different than it is, yet there's a quote in the article making what I find to be an absurd explanation. It's vastly more likely that most Americans don't understand how much wealth the rich have than that they somehow think that poor people are less poor than they really are.

It's not hard to do the math either. In order for a wealthy person to live solely off their wealth, they'd need a couple million dollars just to live at the same earnings level as an employed person making 50k a year. All the employed person sees is someone living in his neighborhood at about the same living level as him and may have no clue that said person is a millionaire. Yet, the guy working to earn 50k a year might have 10-20k in assets, while the guy living on his investments right next door has several hundred times that much.

It's not hard at all to see that much of the wealth in the US is "hidden" in this way. It's all around us, but most of us don't see it. I could go on and talk about the vast amounts of wealth held by corporations, much of which is tied up in day to day operations of said corporations. Add up the total salaries of the employees, and it's a tiny fraction of the whole. We just don't see how much wealth is required for us to have those jobs and those salaries. That's why I'm not surprised at all that the perception is much lower than the reality. But it's *not* because we overestimate the wealth of the poor. It's because as a whole we have no clue how much wealth is floating around us, affecting us every single day, but that isn't directly related to the most common measurement of wealth: Income.



Yes. I suppose it is! ;)

Edited, Sep 28th 2010 4:45pm by gbaji

Strange that yossarian made the same assumption I did. It's the conclusion any sane person should come to when looking at that data. Which is why it's strange that the article never says this, and the expert quoted in the article comes to a completely different conclusion.

You have an odd definition for "full of sh*t".

Disclaimer: I'm Canadian, so my numbers may not be equivalent but they should be close.

It's funny when I see people start arguing about things like this and using numbers like 50k vs 250k as their examples.

Most people do not make 50k a year. I currently make 43k a year, which is well above average (which I think is around 33-35k). That's middle class. Making 50k a year would drastically increase my wealth generation. 7k a year is HUGE for lower income people, it's the difference between being able to buy a house at some point or renting for the rest of your life. It's college for your kids. It's paying cash for a used car instead of financing and giving your money to a bank.

The financial gap keeps increasing because having money makes it easier to keep money. If a low income family buys a house they pay a mortgage for 25 years effectively paying double the cost of the home in order to buy it. If a higher income person buys a house they pay it off in 10 years or pay cash outright, paying little more than the actual value of the home while the poor person covers the rich person's retirement investment income.

Taxing a lower income person more than a higher income person just because the higher income person already has money is about the most absurd taxation model ever created.

World keeps spinning.

This is an interview with economist Robert Reich about our economic disparity. It's kind of interesting.

Except that income inequality is what creates economic prosperity. Most people don't understand this, which is what is really reflected in that data.



No they don't. They reflect assumptions they've been taught to make by their teachers and the guy on the TV screen. It has nothing at all to do with human life or dignity.



What math did I mess up? Each quintile defines a range that is 20% of the whole. I'm using the terms and numbers that are used in the linked page. Care to clarify what you're talking about?

Slowing things down a bit can be a good thing. The more growth the more volatile the market is overall. You need to strike a balance between the two.

Let me give you a second thought on this:



Not when you just had a market crash. Slowing down growth when heading into a bubble might be a good idea (but is often very very difficult to implement). Slowing down growth when you're in an artificial trench due to market overreaction after a crash is the worst thing you can do. You end out "stuck" at the bottom point. Which is what happened during the great depression, and is what is happening right now.

In an industrial economy utilizing capitalism (like ours), my statement about income inequality is valid. Obviously, for land based feudalisms, income inequality has nothing to do with prosperity, but that's because of the zero sum nature of those economies. If the land owner takes a larger share of the bounty of the land, it doesn't tend to increase the bounty next year. It just makes him richer relative to those who work the land.

Which is precisely why Marx and Engles got it wrong. They applied the same zero sum assumptions to industrial capitalism as land based feudalism (and who could blame them, that was all they knew) and therefore made grossly incorrect assessments of the problems of income distribution in an industrial world. Sadly, some people still continue to parrot those false assumptions despite a century and a half of incredibly solid evidence showing just how horribly wrong they were. At the end of the day, standard of living isn't based on relative income distribution. It's based on how much you actually have. And in an industrial based capitalism the benefits to the working class in terms of new products, higher quality products, and lower priced products has provided them with vast improvements in that standard despite their relative wealth decreasing compared to "the rich".


We're obsessed with the wrong things. Relative wealth is irrelevant. It hasn't been a reliable measurement of standard of living for 150 years. When will people stop trying to use it anyway?