Americans Want Less Inequality..and Half Will Vote for Romney?

Dan Ariely on Wealth and Poverty

By Shlomo Maital   

    America’s distribution of wealth is enormously unequal.  The bottom 40% of the population hold only 0.3 % of total wealth.  The next 40% of the population hold only 15% of the wealth.  The top 20% hold 84% of America’s wealth.   Is this what Americans want?  Is this fair?  No way.  Yet half are willing to vote for the multi-zillionaire Mitt Romney for President.  He says Americans like success.  Sure. But do they love a tilted playing field, where wealth gets passed on from parent to child, where Romney pays far less tax than a middle class working person, where Romney shelters money in the Cayman Islands? Why do half of Americans say they’ll vote for him?  What in the world????

   Here is what an American-Israeli behavioral researcher Dan Ariely found, along with Michael Norton,  as told to NPR’s Chris Lydon:

    “There is a  30 year trend in the U.S. to a society of rich and poor:  Big wealth at top, big debt in the middle, poverty at the bottom.   So, the starting point of our research was the debate, what is the right level of equality?  If everybody is equal: it’s socialistic. If there’s some inequality: People are motivated.  When inequality is too large:  It demotivates. But nobody knows what is the right level of inequality.  Michael Norton and I stepped back and said:  Let’s ask people what kind of wealth inequality they want. 

    “We first asked people what they think is the wealth inequality in the US.  We did a study of 30,000 Americans. A national random sample. Imagine there are five segments of people, bottom 20%, next 20%, next, next and richest 20%. How much wealth do you think is owned by the top 20%?  Bottom 40%? 

     “ On average people said 9% of the wealth  accrues to the bottom 40%.  The actual figure (see graph above):   0.3%.     Top 20%? It owns 84% of the wealth.    America is close to some African countries in equality.  People do not understand this. They think there is far more equality in wealth in America than there is in fact.

    “John Rawls was a famous philosopher.  He used the  “veil of ignorance” – What society would you want to wake up in?  Imagine a society, you knew everything about it…what society would you be willing to enter, in a random place?   If you’re wealthy, you want lots of rich people, if you’re poor, you want the poor to have less..but if you don’t know which you are,  you dissociate yourself from your own situation, because you could be anything.  Create an ideal wealth distribution.

    “We found something hopeful and distressing. People created an ideal wealth distribution behind the veil of ignorance that was very equal, more equal than any country in the world.    We gave them the US distribution of wealth and a distribution of wealth more equal than Sweden and asked:  Which would you choose?  92% chosed the ‘more equal than Sweden’.  Perfectly equal?  NOBODY wants that!  People have a different view of the level of inequality we should have.  But they want to create a society more equal than anything we have on the planet. 

“When we break this down by Republicans and Democrats,  we find almost no difference!   Sweden vs. U.S.?  92% prefer Sweden – both Republicans and Democrats want the same!  Women and men, too.   For Republicans, 90.5% want “Sweden”, Democrats, 93%.  There are tiny differences. But they are incredibly small.

“Harvard Business School?  They wanted the poor to have slightly less money..but even Harvard MBA’s wanted a society more equal than any in the world.

“How do we reconcile this?  We have high wealth inequality but people want much much less wealth inequality.  How come?  Politicians are there to obscure our view of reality.  They’re trying to prevent us from looking at society with fresh eyes.    Politicians are labeling things, “socialism”, anything that helps reduce inequality. In the end Americans want far more wealth equality and fairness than they are given.”