4 ms·
This isn't false optimism. It's a surprisingly accurate self-assessment. It turns out that 12 percent of the population will find themselves in the top 1 perce
by blfr 9y ago
This isn't false optimism. It's a surprisingly accurate self-assessment.
It turns out that 12 percent of the population will find themselves in the top 1 percent of the income distribution for at least one year. What’s more, 39 percent of Americans will spend a year in the top 5 percent of the income distribution, 56 percent will find themselves in the top 10 percent, and a whopping 73 percent will spend a year in the top 20 percent of the income distribution.
https://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-to-riches-to-rags.html https://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-...
- yorwba 9y agoSo ... 39% think they'll be in the top 1%, when in reality that's the proportion who get to be in the top 5%. How is that an accurate self-assessment?
- lovich 9y agoIt also worse in that 19% of people think they are the top 1% of earners _currently_ which is more off
- blfr 9y agoFor a question about finance to the general public this is a cheating-on-the-test and educators-wept-tears-of-joy level great result.
- pbhjpbhj 9y agoSo you call it "accurate" because it's not as inaccurate as you think it could be?
- ApolloFortyNine 9y agoIt's pretty close, for people taking a shot in the dark. It's just what these people believed.
- infinite8s 9y agoI think most people vastly underestimate what the tail of this distribution looks like. 0.1% on this income scale is $10 million dollars or more.
- tonyedgecombe 9y agoBut that's the answer to a different question.
- JeremyNT 9y agoPeople should be considering wealth though, not income. When you're looking at the "rich," income doesn't tell you very much, since most "rich" peoples' wealth exists in (and continues to accrue via) non-income vehicles. If you earn a high income for only a few years, you won't have the extensive advantages (tax havens, etc) of the truly wealthy, and you certainly won't have all of the hereditary wealth squirrelled away into offshore accounts and invested into capital that's busy appreciating.
- ryandrake 9y agoFrom your article: > Although 12 percent of the population will experience a year in which they find themselves in the top 1 percent of the income distribution, a mere 0.6 percent will do so in 10 consecutive years. When you ask someone whether they will one day be in the top 1%, I don't think they are interpreting that question as "will you be there for a brief moment?" The question implies some level of permanence. So 38.4% are fooling themselves.
- raker 9y ago38.4% still think they are the target. If their dream is to be in the 1%, they may not want to add new penalties or rules for their potentially future selves.
- contrast 9y agoIf you take a period of time, and judge yourself by your best performance over small fractions of that time, then you are very far away from an accurate self-assessment.
- jaggednad 9y agoSpending a year in the top x% isn’t what most people have in mind with their false optimism. They expect to make it to that bracket and stay there. One-time windfalls that put you in a certain bracket temporarily don’t make low taxes on that bracket net benefit you. You’re still getting screwed all the other years in your life