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Although we feel economically depressed…

Everything around us seems to tell us that we need more and that we do not have enough. As a result, we carry this strange sensation of “poverty” and sometimes fantasize about “if I were rich…”

But it helps to take a step back and get some perspective. If you make $25,000 per year, you are wealthier than 90% of the world’s population. If you make $50,000 per year, you are wealthier than 99% of the world’s population. We are sitting luxuriously in the top of the wine glass.

Most of us are extremely wealthy but by looking at the super rich we feel poor. If we look, rather, to those who lack, we see that 6.7 billion people in the world and almost half of them live on less than $2 per day. Not only are we rich, but we can afford to help them live. But sadly, the  gap between the rich and the poor continues to widen.

Today 40% of world’s wealth is owned by 1% of the population. In fact, the richest fifth of the population receives 82.7% of the total world income.

A World of Work Report from 2008 shows that, between 1990 and 2005, approximately two thirds of the countries experienced an increase in income inequality. The incomes of richer households have increased relative to those of the middle class and poorer households.

Likewise, during the same period, the income gap between the top and bottom 10 per cent of wage earners increased in 70 per cent of the countries for which data are available.

The gap in income inequality is also widening – at an increasing pace – between top executives and the average employee. For example, in the United States in 2007, the chief executive officers (CEOs) of the 15 largest companies earned 520 times more than the average worker. This is up from 360 times more in 2003. Similar patterns, though from lower levels of executive pay, have been registered in Australia, Germany, Hong Kong (China), the Netherlands and South Africa.

Most of us don’t realize how great the disparity is. But when we see these trends, we must ask ourselves how we can change them and how can we create a more just world.

Misperceptions of Wealth in America

Note. Pie charts depict the percentage of wealth possessed by each quintile; for instance, in the United States, the top wealth quintile owns 84% of the total wealth, the second highest 11%, and so on.

The myth of “trickle-down wealth” is still largely held in the U.S., especially by the right-wing, even though Reagan’s own budget director, who promoted this economic policy in the ‘80s, advocates against it today. A new study on American’s beliefs about the U.S. economy shows that American’s perceptions do not match reality.

The study, facilitated by Michael Norton of the Harvard Business School and Dan Ariely of Duke University, discovered that:

  • Respondents dramatically underestimated the current level of wealth inequality.
  • Respondents constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution, believing that the wealthiest quintile held about 59% of the wealth when the actual number is closer to 84%.
  • 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.

Respondents were presented with the three pair-wise combinations of these pie charts (in random order) and asked them to choose which nation they would rather join. A large nationally representative sample of Americans seems to prefer to live in a country more like Sweden than like the United States.

Given the consensus among disparate groups on the gap between an ideal distribution of wealth and the actual level of wealth inequality, why don’t more Americans – especially those with low income – advocate for greater redistribution of wealth? First, our results demonstrate that Americans appear to drastically underestimate the current level of wealth inequality, suggesting they may simply be unaware of the gap. Second, just as people have erroneous beliefs about the actual level of wealth inequality, they may also hold overly optimistic beliefs about opportunities for social mobility in the United States

Finally, and more broadly, Americans exhibit a general disconnect between their attitudes towards economic inequality and their self-interest and public policy preferences, suggesting that even given increased awareness of the gap between ideal and actual wealth distributions, Americans may remain unlikely to advocate for policies that would narrow this gap. Hopefully, the same wll not be true of the church.

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