The above chart is from a paper by Michael Norton of Harvard and Dan Ariely of Duke (the author of Predictably Irrational whom I had the privilege of interviewing in January 2009). Ariely does incredible work showing the difference between the way things are and the way we perceive them to be, and he and Norton make a great contribution by showing how incorrectly Americans view wealth distribution in America.
The top line is the actual U.S.wealth distribution. The second is what Americans think the wealth distribution is. The bottom line is what Americans think the wealth distribution should be. Oddly, the results are based on a survey taken in 2005, before the financial crisis. No doubt wealth is even more unevenly concentrated now.
On The Baseline Scenario, James Kwak connects the findings to “one of the themes brought up in Winner-Take-All Politics by Jacob Hacker and Paul Pierson. Americans really think that society should be considerably more equal than it is, and that attitude has not shifted appreciably during the past thirty years. Yet our political system produces policies that make America more and more unequal, predominantly by cutting taxes for the very rich. Hacker and Pierson’s point is that there has not been an ideological shift toward conservative positions in the country at large (at least not on this issue). Instead, it’s the game of politics that has changed, so policy has become more disassociated from the preferences of the people.”