4 ms·

What’s interesting here is the extent to which the public vastly overestimates the prosperity of lower-income Americans. I bet this is due in large part to the

by byoung2 16y ago

What’s interesting here is the extent to which the public vastly overestimates the prosperity of lower-income Americans. I bet this is due in large part to the availability of credit over the last few decades. Credit has allowed lower-income people to "play the part" of the wealthy, giving rise to the distortion. In particular, interest-only, 0% down mortgages, low or no-interest credit cards, and car leases let someone making $50,000 a year drive a Mercedes, live in a million-dollar house, and buy fancy toys like flat-screen TVs and Jet Skis. I think the vast majority of the public would base their perception of wealth on material possessions such as cars, houses, and boats rather than the amount of money in savings or investments. This could explain the discrepancy.

smhinsey 16y ago
Over the last 30 odd years, "wealthy" has gradually morphed from "compound interest" to "credit approved."
ctdonath 16y ago
Most lower-income americans make more than the world median income. Our "poverty line" is 20x the income line for half the planet. Of late in Atlanta, one news story about someone unable to pay to heat more than one room had a dramatic photo of her showing her heating bill in her living room - with a 55" HDTV and Xbox360 in the same room. Problem with that chart is scale: while 20% may have most of the money, the poorest still have enough to live in world-relative luxury.
- steveklabnik 16y ago
  But someone with $10k here and someone with the equivalent of $10k in Africa have vastly different buying power.
- michaelchisari 16y ago
  someone unable to pay to heat more than one room had a dramatic photo of her showing her heating bill in her living room - with a 55" HDTV and Xbox360 in the same room. There's a difference between the ability to purchase one-off consumer goods and the kind of situation this person is in. Consider that those consumer goods may have been purchased before an economically catastrophic event such as an illness or a layoff, or they may have been a gift from someone who is willing to purchase consumer items, but not willing to provide the household stability that they require. Also consider that, second-hand, these items are not particularly expensive, and even if they were sold, they may only provide a heating bill for a month or two. Especially in places like Atlanta, which are particularly badly insulated, and ill-equipped for severe cold. So what we have is a situation of economic precarity, an instability in which the existence of consumer good purchases does little to remedy a unstable situation. I have a lot of gadgets and toys, but the overall value of them depreciates daily, and if I lost my employment or well-being tomorrow, they would do little to stabilize my financial situation, even if I fully liquidated all of them at a good market rate.
  - skorgu 16y ago
    My inner libertarian is unable to comprehend the confusion of ideas that allows the purchase of a 55" HDTV et cetera without ~six months of rent in the bank. My inner liberal fires back with the complete, utter and deplorable lack of financial education and hence literacy in this country which is at the very least a partial cause of the most recent subprime financial kablooie. My inner conspiracy theorist mutters something about that being awfully profitable for those able and willing to profit from said illiteracy.
    - krschultz 16y ago
      My dad worked at one company for 28 years. He was fired. He had a year of emergency money in cash in the bank. Not rent, 12 months of money to cover every last little expense they had. They should have been set for any emergency, afterall, who has that much cash in the bank? And no outstanding car, credit card, or mortgage debt (lived in the same house for over 30 years) It took him over 18 months to find a job. Sure, there was a 42" HDTV in their house too. They still weren't spending money on ANYTHING. And he was working 50+ hours a week trying to find a job. Their expenses went up a little because he was traveling for interviews and networking at executive events. (Oh sorry, forgot to mention he was CEO of a 500 person company that was beating its targets even during 2008 when the stock market dropped like a stone). So yea, if it can happen to him, it can happen to you. Tell your inner libertarian 6 months is nothing, and maybe he should find out what this current economy is really like.
      - skorgu 16y ago
        The story in question didn't include anyone losing their job. You're arguing against a point I have not made.
    - dkarl 16y ago
      My inner softy/dumbass bought a MacBook Pro as a gift for a single mom/graduate student I was involved with. At today's TV prices, it was enough to pay for a 55" TV (probably not a very good one) and an Xbox 360. She didn't even own a working car, but she had a $1400 laptop. Oh yeah, I also bought her a bicycle and took her and her kid skiing in Colorado. She was extremely frugal and did very well raising her kid and going to school basically on child support alone (she took on very little debt,) but anybody judging by her laptop and her stories of what she did over Christmas vacation would have thought she was irresponsible.
- jonhendry 16y ago
  "Of late in Atlanta, one news story about someone unable to pay to heat more than one room " Meaning she probably was using an inefficient electric heater, in a poorly-insulated home in a normally-warm region, in an unseasonably cold period. I could see that raising the electric bill significantly. I once went away for Thanksgiving weekend and accidentally left my refrigerator or freezer door open a crack. That month's electricity usage was several times higher than any other month since I've lived there. Was the HDTV a projection set? Those are cheap, especially second-hand. Might only be a 720p. EBay has larger TVs listed for $200. Hell, nobody wants those fuzzy room-hogging monsters anymore. Could have been a freebie from a better-off friend or neighbor who upgraded to a flat panel. XBox 360s aren't particularly new, rare, or precious, so might have been acquired used, possibly as a trade. And might have been bought by a child, or received as a gift. Maybe her kid bought it then went into the military and left it behind.
  - Encosia 16y ago
    It drops below freezing quite often in Atlanta. Most houses here have natural gas heating. Needing significant heat in the Winter here is a given.
    - jonhendry 16y ago
      Oh. Well. Nevermind about that part then.
- gnaritas 16y ago
  > Most lower-income americans make more than the world median income. A meaningless stat; cost of living here is far more than the world median as well.
ShabbyDoo 16y ago
I agree. How many people in the bottom wealth quintile earn $200K+/year? Probably not a great portion, but definitely not zero. When Americans think about "wealth" inequality, do they consider the distribution of asset levels, or the distribution of income and the implied potential to accumulate wealth at various levels? Perhaps the ever "improving" social safety net reduces the risks associated with having no wealth (savings)? Another commenter noted the woman who, with her 55" TV in the background, complained that she could not afford to pay to heat her home. I'm sure there's some governmental program (or some government-mandated assistance from the utility companies) waiting to help her out.

by byoung2 16y ago

smhinsey 16y ago

Over the last 30 odd years, "wealthy" has gradually morphed from "compound interest" to "credit approved."

ctdonath 16y ago

Most lower-income americans make more than the world median income. Our "poverty line" is 20x the income line for half the planet. Of late in Atlanta, one news story about someone unable to pay to heat more than one room had a dramatic photo of her showing her heating bill in her living room - with a 55" HDTV and Xbox360 in the same room. Problem with that chart is scale: while 20% may have most of the money, the poorest still have enough to live in world-relative luxury.

steveklabnik 16y ago
But someone with $10k here and someone with the equivalent of $10k in Africa have vastly different buying power.
michaelchisari 16y ago
someone unable to pay to heat more than one room had a dramatic photo of her showing her heating bill in her living room - with a 55" HDTV and Xbox360 in the same room. There's a difference between the ability to purchase one-off consumer goods and the kind of situation this person is in. Consider that those consumer goods may have been purchased before an economically catastrophic event such as an illness or a layoff, or they may have been a gift from someone who is willing to purchase consumer items, but not willing to provide the household stability that they require. Also consider that, second-hand, these items are not particularly expensive, and even if they were sold, they may only provide a heating bill for a month or two. Especially in places like Atlanta, which are particularly badly insulated, and ill-equipped for severe cold. So what we have is a situation of economic precarity, an instability in which the existence of consumer good purchases does little to remedy a unstable situation. I have a lot of gadgets and toys, but the overall value of them depreciates daily, and if I lost my employment or well-being tomorrow, they would do little to stabilize my financial situation, even if I fully liquidated all of them at a good market rate.
- skorgu 16y ago
  My inner libertarian is unable to comprehend the confusion of ideas that allows the purchase of a 55" HDTV et cetera without ~six months of rent in the bank. My inner liberal fires back with the complete, utter and deplorable lack of financial education and hence literacy in this country which is at the very least a partial cause of the most recent subprime financial kablooie. My inner conspiracy theorist mutters something about that being awfully profitable for those able and willing to profit from said illiteracy.
  - krschultz 16y ago
    My dad worked at one company for 28 years. He was fired. He had a year of emergency money in cash in the bank. Not rent, 12 months of money to cover every last little expense they had. They should have been set for any emergency, afterall, who has that much cash in the bank? And no outstanding car, credit card, or mortgage debt (lived in the same house for over 30 years) It took him over 18 months to find a job. Sure, there was a 42" HDTV in their house too. They still weren't spending money on ANYTHING. And he was working 50+ hours a week trying to find a job. Their expenses went up a little because he was traveling for interviews and networking at executive events. (Oh sorry, forgot to mention he was CEO of a 500 person company that was beating its targets even during 2008 when the stock market dropped like a stone). So yea, if it can happen to him, it can happen to you. Tell your inner libertarian 6 months is nothing, and maybe he should find out what this current economy is really like.
    - skorgu 16y ago
      The story in question didn't include anyone losing their job. You're arguing against a point I have not made.
  - dkarl 16y ago
    My inner softy/dumbass bought a MacBook Pro as a gift for a single mom/graduate student I was involved with. At today's TV prices, it was enough to pay for a 55" TV (probably not a very good one) and an Xbox 360. She didn't even own a working car, but she had a $1400 laptop. Oh yeah, I also bought her a bicycle and took her and her kid skiing in Colorado. She was extremely frugal and did very well raising her kid and going to school basically on child support alone (she took on very little debt,) but anybody judging by her laptop and her stories of what she did over Christmas vacation would have thought she was irresponsible.
jonhendry 16y ago
"Of late in Atlanta, one news story about someone unable to pay to heat more than one room " Meaning she probably was using an inefficient electric heater, in a poorly-insulated home in a normally-warm region, in an unseasonably cold period. I could see that raising the electric bill significantly. I once went away for Thanksgiving weekend and accidentally left my refrigerator or freezer door open a crack. That month's electricity usage was several times higher than any other month since I've lived there. Was the HDTV a projection set? Those are cheap, especially second-hand. Might only be a 720p. EBay has larger TVs listed for $200. Hell, nobody wants those fuzzy room-hogging monsters anymore. Could have been a freebie from a better-off friend or neighbor who upgraded to a flat panel. XBox 360s aren't particularly new, rare, or precious, so might have been acquired used, possibly as a trade. And might have been bought by a child, or received as a gift. Maybe her kid bought it then went into the military and left it behind.
- Encosia 16y ago
  It drops below freezing quite often in Atlanta. Most houses here have natural gas heating. Needing significant heat in the Winter here is a given.
  - jonhendry 16y ago
    Oh. Well. Nevermind about that part then.
gnaritas 16y ago
> Most lower-income americans make more than the world median income. A meaningless stat; cost of living here is far more than the world median as well.

ShabbyDoo 16y ago

I agree. How many people in the bottom wealth quintile earn $200K+/year? Probably not a great portion, but definitely not zero. When Americans think about "wealth" inequality, do they consider the distribution of asset levels, or the distribution of income and the implied potential to accumulate wealth at various levels? Perhaps the ever "improving" social safety net reduces the risks associated with having no wealth (savings)? Another commenter noted the woman who, with her 55" TV in the background, complained that she could not afford to pay to heat her home. I'm sure there's some governmental program (or some government-mandated assistance from the utility companies) waiting to help her out.