Video: 92% of Americans Are Wrong About Wealth

Posted by - Thursday, March 7th, 2013

No matter what you think about wealth distribution in America, odds are you are incredibly wrong.

A Harvard business professor and economist surveyed 5,000 Americans about wealth distribution. Using quintiles, 92% picked an ideal ratio that is far more equitable than reality. To make matters worse, what the surveyed Americans think the distribution is these days is incredibly off the mark.

What is telling is the difference between what people think the bottom 40% of Americans have versus the actual numbers. It is barely even visible and is far below what Americans think they have. Expand it slightly and the bottom 60% of Americans barely go beyond what we think the bottom 20% have.

Looking at the other side of the graph, the top 1% has more than what 92% of Americans think the top 20% should ideally have.

Of course, you can read this information a couple different ways...

Americans may having a profound difficulty addressing reality, or the concept could be out of sight and difficult to estimate.

People may not realize how profound the effect of savings and investments are for wealth generation and are only thinking about yearly salaries. Perhaps they don't realize how little money many Americans earn or how little of it is being saved, either out of necessity or overconsumption.

It is also possible that people think that the ideal ratio will involve more meaningful production, and thus wages, from the lower quintiles. The surveyed Americans may think wages and compensation is fair in America but underestimate how many people are at or close to minimum wage or do not work at all.

Please make your own conclusions and feel free to share in a comment. Just keep in mind that 92% of the randomly surveyed Americans picked the ideal ratio in the chart, so political alignment will not significantly impact this survey. This discrepancy between what Americans think is an ideal ratio, where we think the ratio is today and the reality is due to perception.

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