I am a theoretical physicist and currently Director of 
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.
Comments
This might be part of the problem. But there is something else going on in the United States: if one is made aware that they are in, say, the 85'th to 90'th percentile (still nowhere near the 250,000 dollars per year mark), one is likely to say: "I am here because of my merits and those who aren't just don't deserve to be because they are stupid, lazy, etc."
Many of my undergraduate classmates are anti-tax conservatives ....even though their college educations were completely paid for! (Naval Academy graduates). Many still work for defense contractors.
When they argue with me they tell me that I worked for my Ph.D. I did...but I also had veterans benefits, NSF grants and teaching assistantships...all government subsidies!
Shalom Ollie,
I must take exception to the suggestion that Veterans Benefits are somehow unearned. I graduated from college debt free because of the old G.I. Bill and Ohio's tuition benefit for National Guard members.
These are simply employee benefits of 11 years of service. I received similar benefits from a private-sector employer for graduate school. I, and every other veteran, earned every penny and more.
B'shalom,
Jeff
Shalom Mano,
I have wrestled with this concept for a number of years and yet have to come to an acceptable answer.
The closest I have ever personally come is the idea that in the minds of Americans, to be ever mindful of net worth is to be middle class. Only the upper class are blessed with so much wealth that they never have to give even a first thought as to whether or they can afford to indulge a whim.
I have friends with mid-six-figure incomes who fret over mortgages, car payments and paying college tuition. They don't consider that their mortgage is low five figures a month, that their car payment is high four figures, and that the college tuition plus expenses for their children run mid-five figures per year.
Because they believe they have to worry about how to support the lifestyle they feel entitled to, they're middle class; end of discussion.
I don't know how much it could help the discussion, but a reliable set of economic markers to frame the debate might be a good starting point.
B'shalom,
Jeff
Jeff,
I think there is a lot in what you say. It would explain the complaints of rich people about tough things are for them, that I wrote about before and the way that a newly elected tea party congressperson complained to his constituents how hard it was to live on the $174,000 congressional salary.
Well, living in Brunei Darussalam where the wealth is definitely NOT equitably distributed, I still find most local people here believe they are somewhat 'middle class'prob due to those around them being in a similar financial situation .
Libby
Yes, I think that the environment people adapt to make them feel as if, they and the people around them are average.
This makes me wonder if I'm either overestimating or underestimating our current standing. I don't think we've reached the middle class, since we don't own a house yet... Is the classification the same for every country?
Manuela
This is a really interesting topic. I've always felt that people that were supportive of economic policies favoring the rich took that position because of their goal to be middle class (or better). But what I've found over the years agrees with this study -- simply put, most people have no clue what constitutes middle class. Because of this, they assume they're average since they match up with their peers. Of course, the exception to this would be the people that are really broke. I don't see how they could possibly think that they're middle class...
Of course, the other possibility is that people favor "conservative" policies simply because they really are more "fair"?