Monday, December 16, 2013

US Public Grossly Overestimates The Income Of The Rich And Extent Of Income Inequality

From Association for Psychological Science, Press Release, "Income Inequality Is Rising, But Maybe Not as Fast as You Think:"
[Survey] Participants tended to overestimate the number of American households that are just scraping by, believing that, on average, about 48% of households make less than $35,000 a year. Census data show that only 37% actually fall under that number. By contrast, participants underestimated the number of American households that are faring well. They believed that, on average, only about 23% of households make $75,000 or greater a year, when census data show that 32% actually make more than that number.

In addition, participants believed the income inequality gap was much larger than it actually is, estimating that the richest 20% makes about 31 times more than the poorest 20%. While the income gap has grown in the past 40 years, the reality is that the top 20% makes about 15.5 times more than the bottom 20% – half the size of the gap estimated by participants.

The researchers discovered that this income gap overestimation was due primarily to inflated perceptions regarding the richest 20%. In 2010, census data show that the richest 20% had average incomes of about $169,000, yet participants believed it was closer to $2,000,000.

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