Are Americans Seeking Wealth Distribution More Like Sweden?

New research on perceptions of wealth in the US — from Michael Norton and Dan Ariely at Harvard Business School and Duke University, respectively —  is worth a closer look. At first blush, it would seem that 92 percent of respondents rather live in a quasi-socialist economy more resembling Sweden than the US. The explanation they offer is that the gap between the rich and the poor has become far greater than surveyed Americans both think it is and would like it to be. Here are the findings, according to The Raw Story:

“…the study also found that respondents preferred Sweden’s model over a model of perfect income equality for everyone, ‘suggesting that Americans prefer some inequality to perfect equality, but not to the degree currently present in the United States,’ the authors state. Recent analyses have shown that income inequality in the US has grown steadily for the past three decades and reached its highest level on record, exceeding even the large disparities seen in the 1920s, before the Great Depression. Norton and Ariely estimate that the one percent wealthiest Americans hold nearly 50 percent of the country’s wealth, while the richest 20 percent hold 84 percent of the wealth.

“But in their study, the authors found Americans generally underestimate the income disparity. When asked to estimate, respondents on average estimated that the top 20 percent have 59 percent of the wealth (as opposed to the real number, 84 percent). And when asked to choose how much the top 20 percent should have, on average respondents said 32 percent — a number similar to the wealth distribution seen in Sweden.

“‘What is most striking’ about the results, argue the authors, is that they show ‘more consensus than disagreement among … different demographic groups. All groups – even the wealthiest respondents – desired a more equal distribution of wealth than what they estimated the current United States level to be, while all groups also desired some inequality – even the poorest respondents.'”

The main issue appears to be that people in the US, rich and poor alike, are not fully aware of how pronounced income inequality has become. It’s probably a stretch to say that Americans want a system more like Swedes simply because the wealth distribution in Sweden is more similar to what respondents expect in the US.

That said, it’s no surprise the average citizen doesn’t estimate offhand that the wealthiest 20 percent of Americans hold 84 percent of the nation’s wealth. It’s a huge chunk of prosperity in a very few hands… and it shows how over recent decades the US has become quite the lopsided nation, much more so than most people expect. You can read the details in The Raw Story’s coverage of the new study on how most Americans want wealth distribution similar to Sweden.


Rocky Vega,
The Daily Reckoning

The Daily Reckoning