May 15, 2011
Everyone thinks they are in the middle class
One of the enduring puzzles is why so many poor and middle class people are so supportive of policies that benefit only the rich. The often cited reasons are that these people are either stupid or that they have a fantasy that they will be very rich someday and are protecting their future interests.
But via Kevin Drum, I heard about a new study that suggests another reason, which is that people have a highly distorted idea about where they themselves stand in the economic pecking order. The study asked people in Argentina in the ten income deciles to rank themselves as to which decile they thought they were in. "They found that everyone thought they were basically middle class. Poor people consistently overestimated their rank, and rich people consistently underestimated their rank."
Why is this? "The authors suggest that this misperception may be related to the types of people respondents interact with, and therefore use as a reference point. If you're mostly exposed to people earning about as much as you, you're likely to think your earnings are average."
The solution? Make people better aware of their true position. "In the Argentina study, for example, respondents were eventually informed about whether their own rankings estimates were too high or too low. This news changed people's policy attitudes. People who thought they were relatively richer than they actually were started to demand higher levels of income redistribution when told they were actually relatively poor."
These results are consistent with a study done in the US that I wrote about late last year which showed that people here think that wealth is more equitably distributed than it really is.