Regardless of political affiliation, Americans are remarkably close in their opinions of how wealth would be ideally distributed, according to economists Dan Ariely of Duke University and Michael I. Norton of Harvard Business School.
The results of their survey of 5,522 Americans randomly selected from one million people in 47 states, indicated that most people overestimate the equality in the distribution of wealth and would prefer an even more equal distribution of wealth. The persons polled were asked to divide the population into five groups (“quintiles”) and to estimate how much of the total wealth each quintile owned (in 2005) and how much each group should own in an ideal world. Amazingly, people in all quintiles believe that the two poorest quintiles should have at least twice as much of the total wealth as they now own.
Arielly’s summary of the findings is in his blog, Irrationally Yours, as presented in this graph:
To move from the reality to the ideal in distribution of wealth requires redistribution of income, which can be accomplished through market forces as well as through taxes on incomes and property. In Missouri, the incomes of the lowest-earning quintile grew at a rate of 10.9% over the period from the late 1980s through the mid-2000s, while the incomes of the highest fifth grew by 35.9%, which probably represents a widening of the disparity in wealth.
Many Americans, if not most Americans, have a visceral objection to federal and state governments taking wealth from one class of citizens and giving it to another class. But those of us in the bottom 80% wouldn’t mind if somehow–without any government action–the invisible hand of the market acted as Robin Hood. And we each have our thoughts about the effect of tax policies as incentives for the rich and the poor.
What is it about our economy and our incredibly complicated tax laws that makes the existing distribution of wealth so different from a distribution that we all agree would be better? When considering whether to accept or reject change, the first step in the analysis has to be a critical look at the status quo.