In my opinion, he’s right to be worried. The concentration of wealth at the top really has grown. And not just in the US. In 2017, for the first time since we’ve had reliable wealth measurement drawn from national statistics, the top 1% wealthiest people in the world owned more than the rest of the population put together.
But when survey researchers ask people to guess what proportion of the wealth the top 1% in their respective countries own, they’re often way out, as seen in Ipsos’ Perils of Perception studies.
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Britain and France were the worst at guessing. The actual proportion of wealth owned by the top 1% in both countries is the same, at 23%. But Brits thought the top 1% owned 59% of wealth while the French thought it was 56%.
Although people in some surprising countries did underestimate this concentration of wealth. The average guess in Russia was that the top 1% own 53% of the wealth, which is actually not that different from the guess in the UK and France. But the reality is far worse, the top 1% in Russia actually own an extraordinary 70% of the country’s wealth, three times the level of the UK and France.
The US also stands out as one of the most unequal countries for wealth distribution among the rich nations included in the study, with the top 1% owning 37% of the country’s wealth, but with the guess again less optimistic, similar to France and the UK, at 57%
So, why are we so out of kilter with reality?
A big part of the explanation lies in our emotional reaction, rather than our lack of knowledge of the facts.
Like Obama, we know inequality is a growing issue, and we hear regular, vivid anecdotes of excess running alongside stories of the real poverty experienced by many, so our guesses can become exaggerated. Whether we’re entirely conscious of it or not, we’re partly sending a message that this is a big and worrying issue: inequality looms large in our minds, so we literally inflate the figures.
Social psychologists have a term for this phenomenon, they label it: ‘emotional innumeracy’. This means that when we ask people to guess at the scale of an issue, cause and effect run in both directions: we’re not just worried about things that we think are big issues, we exaggerate the scale of issues that we’re already worried about.
Emotional innumeracy points to a vital conclusion: because our misperceptions of reality are partly emotional, simple “myth-busting” – telling people they’re wrong on the facts – will not really help that much, because it misdiagnoses the cause. Our misperceptions are often not about ignorance, but more about a world view driven by our underlying attitudes and beliefs.
We also asked people what they thought the top 1% should own, and this reveals some fascinating patterns.
First, people are mostly not calling for complete equality of wealth – with the averages running from people saying the top 1% should have 14% of wealth in Israel to 32% in China.
Some people in all countries do want complete wealth parity though – and Britain is highest on this: 19% of Brits said the top 1% should only have 1%, followed closely by Russia, where 18 % said they should only have 1%.
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But, second, if we go back to the averages of what we say inequality should be and compare that with the actual level, something immediately jumps out: on the surface, people seem pretty comfortable with the current state of wealth inequality in many countries.
For example, the French said the top 1% should own 27%, when they actually ‘only’ currently own 23%. A simplistic reading of this is that the French – a country that has ‘égalité’ (equality) as part of its national strapline – are saying give the wealthiest a bit more.