Bankruptcy

Perceptions of Income Inequality

By Bob Lawless

A friend alerted me to "Building a Better America -- One Wealth Quintile at a Time," an article by Michael Norton of the Harvard Business School and Dan Ariely of Duke University and that appears in the current issue of Perspectives on Psychological Science. Although a discussion of the paper kicked around in the blogosphere last fall, I missed it. Credit Slips readers might find the paper interesting but, if you're like me, might not otherwise see it. Here is the abstract:

Disagreements about the optimal level of wealth inequality underlie policy debates ranging from taxation to welfare. We attempt to insert the desires of ?regular? Americans into these debates, by asking a nationally representative online panel to estimate the current distribution of wealth in the United States and to ?build a better America? by constructing distributions with their ideal level of inequality. First, respondents dramatically underestimated the current level of wealth inequality. Second, respondents constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution. Most important from a policy perspective, we observed a surprising level of consensus: All demographic groups ? even those not usually associated with wealth redistribution such as Republicans and the wealthy ? desired a more equal distribution of wealth than the status quo.

A full version of the paper can be found on Professor Norton's web site.

Full post as published by Credit Slips on March 01, 2011 (boomark / email).