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How U.S. feels about wealth gap
Dan Ariely
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TEXT OF INTERVIEW
Kai Ryssdal: Most everybody has lost economic ground over the past two years or so. But before the recession and the financial crisis and the wealth destruction that they brought, people in the upper reaches of society were proportionately way better off than most of the rest of the country. While over the past decade or two everybody else has been figuring out how to get by with less. Dan Ariely polled more than 10,000 people -- including, via our Web site, some of you -- to discover how we feel about the ever-increasing U.S. wealth gap. Dan, it's good to talk to you again.
DAN ARIELY: Same here, as always.
Ryssdal: So it is the haves and the have nots, a little wealth distribution that you've been looking at.
ARIELY: Yes, and the first thing I should tell you is that you don't have many people listening to you.
Ryssdal: To this show?
ARIELY: Yeah, only about 600 people filled out the survey.
Ryssdal: All right. So tt's actually 601 because you gotta count my mom.
ARIELY: OK, so aside from the fact that not many people are listening or at least not many people filled the survey, here is the question that we're interested in. The philosopher Rawls proposed a long time ago that a fair society is a society that if you knew everything about it, you'd be willing to join it in a random place in the distribution. You would be willing to toss the dice and put you in one bin of wealth, for example. So we posed people two questions, we said: What do you think the wealth distribution in the U.S. is? And what do you think is the ideal wealth distribution?
Ryssdal: So in other words, what do you think in the United States now, who has most of the money and then what ought it be, right?
ARIELY: That's right. And what happened is that first of all, people dramatically underestimate the wealth inequality in the U.S.
Ryssdal: Underestimate. So the fact of the matter is fewer people have more of the money.
ARIELY: That's right. So if you look at the whole world in terms of wealth distribution -- before the recession, I don't have data about after the recession -- but before the recession we're basically between the Western world and South America. We were the most skewed distribution of the Western world in terms of the haves and the have nots. But now the more interesting question is what do people think it should be. And what we found was that actually there's a huge agreement between people in terms of what it should be. And this happened to both your listeners and the general sample population. You would take, for example, Republicans and Democrats, and you would think that they would vary dramatically, and they don't, I mean they differ but they don't differ so much. So you take Republicans and they basically agree with Democrats, and you take people with low income versus high income, and they basically agree.
Ryssdal: Can you quantify what we have right now? I mean, what percentage of people have what percent of the wealth?
ARIELY: Right now the top 20 percent of the people have about 85 percent of the wealth. People think that they only own 68 percent of the wealth, so people underestimate the inequity, but if you ask them what's kind of an ideal world in the Rawls kind of sense that you would actually want to participate in, they say 33 percent. So they say in an ideal world, we want the top 20 percent to own more than 20 percent, we want them to be wealthier, but we want them to own about 33 percent of the wealth.
Ryssdal: That's so interesting. They still want the rich to be rich, but just not as rich?
ARIELY: Yeah, you know, actually, rich to be rich is a perfectly reasonable idea, right? I mean, people that have money can create jobs, they can create factories, so there is benefit in non-equal distributions of wealth, the question is what is the ideal?
Ryssdal: I'm stuck on the idea that there is a segment of society out there that thinks that inequality is the way it ought to be.
ARIELY: Yeah, you know, everybody thinks inequality is the way to be. The main lesson for me from this whole study is that when we look at the political arena, we kind of have this huge polarization, and yet when we ask people a question that is not tainted by saying Republicans or Democrats -- it's just formed and here are the numbers, and what kind of society do you want to live in -- the answers come out quite close. And for me that's kind of the optimistic outcome of all of this is in fact as a society, I think we're much more similar to each other than the political arena plays out how it looks like.
Ryssdal: You learn something new everyday. Dan Ariely teaches behavioral economics at Duke University. Dan, thanks a lot.
ARIELY: My pleasure.
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You're right Ashley... they have affixed human characteristics to inanimate objects (corporations) with the same rights as us (PEOPLE)... and the right pimps out religious cohorts who have, I assume, co-signed for this (animism) in the name of God?
This is a very interesting little survey, but is there any way to see this work? Any forthcoming publications or at least something to look at instead of just listening to Kai? Not that I didn't enjoy this interview, I'd simply like to look at the methods and results a little more.
I believe it was the President Bartlett character on the TV show, "The West Wing" who said it best...but I'll have to paraphrase: people support the rights of the rich, believing one day, they too will be rich.
We watch TV and movies, and we see what its like to be at the top of a zero-sum society. If we see a poor character in a movie or TV, its rarely a feel-good movie, is it? So we want to be like what we see on TV or in movies. We want the fantasy.
Just like when you ask people about feudal times. Many say they wouldn't mind being stuck in those times, because the people don't realize, if they are not nobility now, they wouldn't be back then, either. There was no middle class, just a workman's class between the farmers and the landowners.
But people will still assume they would be a knight or a king, living in the court--not in the huts of farmers, eating the stale bread.
"What question we were being asked to answer? Should the rich get a bigger piece of the wealth cake just because they are wealthy or should they get a bigger piece of the wealth cake because they have earned it?"
Cakes/pies are terrible analogies for total wealth. First, cakes/pies are static, wealth is not. People focus too much on how big their slice is vs. how big the overall pie is. They assume if someone else has a big slice they must settle for a small slice.
But if we want to use a cake/pie analogy, let's be very clear who and how much each person contributed to making it. The cake/pie analogy assumes everyone contributed equally, or that everyone deserves a slice of something that really belongs to someone else. The total wealth of a nation, or the world for that matter isn't collectively owned. Bill Gates and Warren Buffet have far more wealth than me, but they don't owe me anything! Their slice is not mine, and the size of their slice doesn't limit how big of a slice I could have.
The reality is a whole bunch of Americans are at the table devouring a cake they contributed little if anything to. They only believe they contributed to it.
Because I hear the 80/20 rule tossed around regularly in every imaginable situation, I would have expected that everyone would have assumed that the top 20% had 80% of the wealth.
I am further surprised that Kai said "I'm stuck on the idea that there is a segment of society out there that thinks that inequality is the way it ought to be." Honestly, Kai, when was the last time you offered to pool the salaries of everyone at Marketplace and cut it evenly?
The only time someone suggests that is when they think they will get more from the deal. Wouldn't that be "ill-gotten gains?"
The discussion touches on interesting public attitudes toward wealth but focussing on public thoughts about what proportion has it and what proportion doesn't But an important adjunct question might be personal attitudes toward those individuals who the public thinks have wealth. Are they envious of the wealthy? Do they think the inequality is harmful or unfair? Was it earned and therefor "good' or inherited or achieved by "good luck"and therefor undeserved? Do they think it harmful to their own welfare or their own chances for comfort and safety? Or if not harmful at least diminishing their own chances at wealth accumulation? Do economists, or psychologists or sociologists or whomever have an opinion of the public attitudes toward those who they regard as wealthy? Do the academics explain that the use of wealth almost always must eventually benefit the total society since it can only be used for purchasing material goods made by the labor and capital of others, or for savings and/or investments that recirculate money for useful purposes. Unless wealth is stored under the mattress in cash, it must of necessity find its way for public use, and often to create some benefit to the total society. Perhaps the only obvious negative use of substantial wealth is to provide power by unlimited influence of wealth owner's personal views but even those most extreme views are to some extent legally restricted. Is it not possible that the majority proportion of non-wealth owners has achieved their degree of "pursuit of happiness" and spend only a passing amount of time thinking about the wealthy however many there are?
I was struck by Kai Ryssdal's comment: "I'm stuck on the idea that there is a segment of society out there that thinks that inequality is the way it ought to be." That comment strikes me as almost a total misreading of the survey results. Americans, this survey shows, want to see a level of inequality that's half of what we have now -- and the level of inequality we have now, they believe, is significantly less than the level of inequality we actually do have.
To the extent that our wealth concentration is a result of monopolies, of privilege, of some of us somehow being more entitled to natural resources than others, or to some of us owning awesomely valuable -- and appreciating -- urban land and riding it up, our wealth concentration is wrong.
Henry George wrote about this 130 years ago in a book called "Progress & Poverty." It still reads well in 2010 and has a distinctive and important message for us today. It is a "third way" -- neither left nor right -- which can produce the setting for the sort of economic justice Rawls described.
You might look for "Peace, Justice and Economic Reform" online.
I dislike Ariely, and my feelings grew after this segment. How dare he base his a$$umptions about the marketplace listeners based on his badly-designed survey. I'm surprised he got any responses at all. Maybe this sounds good if you're an economist or if English is not your first language but asking a normal person to make assumptions about "the standard deviation" of wealth is stupid. I think he tried to make Kai look dumb (I love KAI) and he only managed to annoy me more than usual. Pls find another economist or whatever this snob purports to be to fill this segment! Standard deviation indeed.
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