39 ms·

I wouldn't be surprised if most respondents are answering as if the question were about income rather than wealth.

by pg 16y ago

arvinjoar 16y ago
Exactly, and I can't see why the charts shouldn't look like this. Saving money is a luxury, it's a good thing to do if you can afford it and if you're saving your money for something worthwhile. What's important is that people are living the lives they want to be living, and I'm sure that's possible without lots of savings (although wealth could probably help). Most people like to spend money now instead of later though, and the charts reflect that. It's as simple as time preference.
- kiba 16y ago
  All things being equal, human beings prefer an object now instead of an object in the future.
- Benjo 16y ago
  The problem is the distorting effect that wealth has on equal representation in a democracy.
- jellicle 16y ago
  You're absolutely right, the reason why people earning $10K/year aren't millionaires is because they just aren't saving properly. {shakes head sadly}
  - zacharypinter 16y ago
    There's probably an interesting correlation-vs-causation discussion somewhere beween the poor and the wealthy. Are the poor not saving because they don't have any money to save (probably an easy argument for the very poor)? Or is it that people are poor because they don't save (or rather, because they are poor at managing their finances)? There's plenty of examples of people that win the lottery, only to spend it all within a few years and be back to where they started.
- billybob 16y ago
  Saving money is not a luxury. It's completely irrational not to save unless you are truly destitute. Put it this way: you have a car. Sooner or later it will break. Are you preparing for that? Are you setting aside money to repair and replace it - money that earns you interest while it builds up? Or are you borrowing money and spending all your money on payments, risking that you won't be able to pay rent if your transmission breaks? OK, if you make minimum wage, this is hard to get out of. But it's possible. Can you live with your mom? Can you drive a worse car? If you can get that thing paid off and get ahead of the debt, get some savings going, you'll be on a moving sidewalk to better finances, less stress and unhappiness, etc. If you're spending everything on a payment, you're on a treadmill pushing you toward bankruptcy. Yes, it's hard to make do with a small income. But saving is something that really, almost anybody can and should do. Liking to spend money NOW should not overrule our desire not to be thrown out in the cold next month, or our desire to sleep peacefully. There must be a balance, and all but the most destitute can do this. By which I mean "half a cup of rice a day."
patio11 16y ago
I also wouldn't be, but IIRC it doesn't materially change the picture. (No citation handy at the moment.)
- Benjo 16y ago
  http://en.wikipedia.org/wiki/Income_distribution http://en.wikipedia.org/wiki/Income_distribution Wealth inequality is much more pronounced than income inequality, especially in the bottom quintiles.
  - redwood 16y ago
    Which is very interesting, if you think about it: it means that through a little more money now, you will generally have a lot more money later... i.e. money makes it easy to make money
    - johnswamps 16y ago
      No, it means that if you're poor, you're spending a larger percentage of your income and saving less of it. Poor people have to spend a higher percentage of their money on basic necessities such as rent, food, clothing, transportation, etc.
      - philwelch 16y ago
        I think you and redwood are violently in agreement. If you have more money, you can save your money and that money will make you more money. If you have less money, you can't.
        johnswamps 16y ago
        I agree with the statement, but I disagree that it's responsible for the income and wealth disparity beween the rich and poor. Yes, money will make you more money, but by definition that increases your income.
        16y ago
redwood 16y ago
The other thing is that the bottom folks aren't as "needy" as folks were in, say, the great depression. - I.e. "no one starves in america" and most people know this: so while the distribution in wealth is extreme, the distribution in QUALITY OF LIFE is less extreme. - This biases people's view and makes them feel that generally, for most americans, things are okay. This is all true of course: except that the worry about an ultra-wealthy minority is not that their quality of life is too high compared to your's (it's not) but rather that their POWER is too extreme, since money is power and speech, and that since power corrupts, they MIGHT ultimately work to reduce further the strength of the lower classes to the point that poverty really does become extreme. - Since as Marx shows this is not really in the interest of the upper classes (that is: tyranny and extreme poverty are precisely what leads to a violent reaction by the down-trodden) it may be that, through the miracle of technology's abundance, we will continue on a track where we all have a high quality of life, but only a smaller and smaller pool of people "own" the production engines. How a world where a few own all the profits, but the masses have what they need to survive looks, we will soon see: but it certainly feels very Brave New World and is, perhaps, inevitable.
- jacoblyles 16y ago
  The fears of a plutocracy are overblown. You write that "money is power and speech". But people like Meg Whitman and Mitt Romney have tried to buy elections with their personal fortunes and it didn't work (and self-funded candidates do worse, on average, than other candidates). Political inertia, the passions of the mob, and the maladaptive incentives facing legislators and bureaucrats are much more potent forces shaping our society than concentrated wealth.
  - drivebyacct2 16y ago
    How can you say that? I'm pulling stuff out of my ass and I'd be willing to put money on the fact that over 95% of our elected officials fall in the top 20%, probably even the top 10%.
  - redwood 16y ago
    Agreed today: but it could be that the wealthy will LEARN to be more controlling. Meg Whitman was a failure: but what if she's backed someone who was a great politician instead. And perhaps this is precisely how much of our politics already works. I don't fear this as much as some because I know that elites have always held undue influence, and that has been generally a good thing, with some bad apples throughout. Small numbers of people have always had extraordinary sway in societies. It's just that today, with media and technology, the ratios are larger than ever before. An interesting article on the subject: http://www.nytimes.com/2010/12/26/business/26excerpt.html?_r=1&hp http://www.nytimes.com/2010/12/26/business/26excerpt.html?_r...
zamfi 16y ago
I wondered about this too. Just for fun, I plotted the household income distribution on the same chart: http://dl.dropbox.com/u/667/income-distribution.jpg http://dl.dropbox.com/u/667/income-distribution.jpg Income distribution looks quite different from wealth distribution, and is more equal than the estimates in the original article. [ Household income data from here: http://www.econlib.org/library/Enc/DistributionofIncome.html http://www.econlib.org/library/Enc/DistributionofIncome.html]
- anthonyb 16y ago
  What does it look like once you subtract cost of living expenses though, or even just minimum wage? That'd give you an idea of the discretionary spending of each quintile; more informative than just a raw value. I suspect that discretionary spending would follow much the same pattern as wealth.
colanderman 16y ago
Agreed. I would think that most of those same people have no wealth; only income.
- jonhendry 16y ago
  Probably negative wealth, actually.
tajddin 16y ago
What you're arguing is the semantics of a very personal word that means different things to very different people. To the poor, wealth == money; to the rich, wealth == all of the other things that one can think about when you don't have to worry about a roof over your head. Don't take this as an attack -- just as a my personal opinion.
nostromo 16y ago
The paper says that they addressed that: "We ensured that all respondents had the same working definition of wealth by requiring them to read the following before beginning the survey: “Wealth, also known as net worth, is defined as the total value of everything someone owns minus any debt that he or she owes. A person's net worth includes his or her bank account savings plus the value of other things such as property, stocks, bonds, art, collections, etc., minus the value of things like loans and mortgages."
- cperciva 16y ago
  Requiring people to read the definition doesn't guarantee that they will understand it.
  - jberryman 16y ago
    Of course. But wealth as defined in that sentence is not a difficult thing to understand. It's what everyone thinks about when they say someone is wealthy: they have a lot of stuff and a lot of money in the bank. I also disagree with pg's assessment; I find it hard to imagine peoples minds defaulting to thinking of percentage of income earned (what does that even mean?) over percentages of money and stuff owned.
  - Alex3917 16y ago
    Does it really matter if they don't understand it though? At some level if the point of the exercise to show that Americans don't understand how wealth is distributed, then the fact that Americans don't know what wealth is almost tautologically proves the point. I realize there is a bit more nuance, but it's still pretty interesting as is.
Confusion 16y ago
I don't expect the same graphs for income to be qualitatively different. The point that people vastly overestimate the prosperity of the lower income classes remains standing.

I wouldn't be surprised if most respondents are answering as if the question were about income rather than wealth.

by pg 16y ago

I wouldn't be surprised if most respondents are answering as if the question were about income rather than wealth.

Exactly, and I can't see why the charts shouldn't look like this. Saving money is a luxury, it's a good thing to do if you can afford it and if you're saving your money for something worthwhile. What's important is that people are living the lives they want to be living, and I'm sure that's possible without lots of savings (although wealth could probably help). Most people like to spend money now instead of later though, and the charts reflect that. It's as simple as time preference.

kiba 16y ago
All things being equal, human beings prefer an object now instead of an object in the future.
Benjo 16y ago
The problem is the distorting effect that wealth has on equal representation in a democracy.
jellicle 16y ago
You're absolutely right, the reason why people earning $10K/year aren't millionaires is because they just aren't saving properly. {shakes head sadly}
- zacharypinter 16y ago
  There's probably an interesting correlation-vs-causation discussion somewhere beween the poor and the wealthy. Are the poor not saving because they don't have any money to save (probably an easy argument for the very poor)? Or is it that people are poor because they don't save (or rather, because they are poor at managing their finances)? There's plenty of examples of people that win the lottery, only to spend it all within a few years and be back to where they started.
billybob 16y ago
Saving money is not a luxury. It's completely irrational not to save unless you are truly destitute. Put it this way: you have a car. Sooner or later it will break. Are you preparing for that? Are you setting aside money to repair and replace it - money that earns you interest while it builds up? Or are you borrowing money and spending all your money on payments, risking that you won't be able to pay rent if your transmission breaks? OK, if you make minimum wage, this is hard to get out of. But it's possible. Can you live with your mom? Can you drive a worse car? If you can get that thing paid off and get ahead of the debt, get some savings going, you'll be on a moving sidewalk to better finances, less stress and unhappiness, etc. If you're spending everything on a payment, you're on a treadmill pushing you toward bankruptcy. Yes, it's hard to make do with a small income. But saving is something that really, almost anybody can and should do. Liking to spend money NOW should not overrule our desire not to be thrown out in the cold next month, or our desire to sleep peacefully. There must be a balance, and all but the most destitute can do this. By which I mean "half a cup of rice a day."

patio11 16y ago

I also wouldn't be, but IIRC it doesn't materially change the picture. (No citation handy at the moment.)

Benjo 16y ago
http://en.wikipedia.org/wiki/Income_distribution http://en.wikipedia.org/wiki/Income_distribution Wealth inequality is much more pronounced than income inequality, especially in the bottom quintiles.
- redwood 16y ago
  Which is very interesting, if you think about it: it means that through a little more money now, you will generally have a lot more money later... i.e. money makes it easy to make money
  - johnswamps 16y ago
    No, it means that if you're poor, you're spending a larger percentage of your income and saving less of it. Poor people have to spend a higher percentage of their money on basic necessities such as rent, food, clothing, transportation, etc.
    - philwelch 16y ago
      I think you and redwood are violently in agreement. If you have more money, you can save your money and that money will make you more money. If you have less money, you can't.
      - johnswamps 16y ago
        I agree with the statement, but I disagree that it's responsible for the income and wealth disparity beween the rich and poor. Yes, money will make you more money, but by definition that increases your income.
      - 16y ago

redwood 16y ago

The other thing is that the bottom folks aren't as "needy" as folks were in, say, the great depression. - I.e. "no one starves in america" and most people know this: so while the distribution in wealth is extreme, the distribution in QUALITY OF LIFE is less extreme. - This biases people's view and makes them feel that generally, for most americans, things are okay. This is all true of course: except that the worry about an ultra-wealthy minority is not that their quality of life is too high compared to your's (it's not) but rather that their POWER is too extreme, since money is power and speech, and that since power corrupts, they MIGHT ultimately work to reduce further the strength of the lower classes to the point that poverty really does become extreme. - Since as Marx shows this is not really in the interest of the upper classes (that is: tyranny and extreme poverty are precisely what leads to a violent reaction by the down-trodden) it may be that, through the miracle of technology's abundance, we will continue on a track where we all have a high quality of life, but only a smaller and smaller pool of people "own" the production engines. How a world where a few own all the profits, but the masses have what they need to survive looks, we will soon see: but it certainly feels very Brave New World and is, perhaps, inevitable.

jacoblyles 16y ago
The fears of a plutocracy are overblown. You write that "money is power and speech". But people like Meg Whitman and Mitt Romney have tried to buy elections with their personal fortunes and it didn't work (and self-funded candidates do worse, on average, than other candidates). Political inertia, the passions of the mob, and the maladaptive incentives facing legislators and bureaucrats are much more potent forces shaping our society than concentrated wealth.
- drivebyacct2 16y ago
  How can you say that? I'm pulling stuff out of my ass and I'd be willing to put money on the fact that over 95% of our elected officials fall in the top 20%, probably even the top 10%.
- redwood 16y ago
  Agreed today: but it could be that the wealthy will LEARN to be more controlling. Meg Whitman was a failure: but what if she's backed someone who was a great politician instead. And perhaps this is precisely how much of our politics already works. I don't fear this as much as some because I know that elites have always held undue influence, and that has been generally a good thing, with some bad apples throughout. Small numbers of people have always had extraordinary sway in societies. It's just that today, with media and technology, the ratios are larger than ever before. An interesting article on the subject: http://www.nytimes.com/2010/12/26/business/26excerpt.html?_r=1&hp http://www.nytimes.com/2010/12/26/business/26excerpt.html?_r...

zamfi 16y ago

I wondered about this too. Just for fun, I plotted the household income distribution on the same chart: http://dl.dropbox.com/u/667/income-distribution.jpg http://dl.dropbox.com/u/667/income-distribution.jpg Income distribution looks quite different from wealth distribution, and is more equal than the estimates in the original article. [ Household income data from here: http://www.econlib.org/library/Enc/DistributionofIncome.html http://www.econlib.org/library/Enc/DistributionofIncome.html]

anthonyb 16y ago
What does it look like once you subtract cost of living expenses though, or even just minimum wage? That'd give you an idea of the discretionary spending of each quintile; more informative than just a raw value. I suspect that discretionary spending would follow much the same pattern as wealth.

colanderman 16y ago

Agreed. I would think that most of those same people have no wealth; only income.

jonhendry 16y ago
Probably negative wealth, actually.

tajddin 16y ago

What you're arguing is the semantics of a very personal word that means different things to very different people. To the poor, wealth == money; to the rich, wealth == all of the other things that one can think about when you don't have to worry about a roof over your head. Don't take this as an attack -- just as a my personal opinion.

nostromo 16y ago

The paper says that they addressed that: "We ensured that all respondents had the same working definition of wealth by requiring them to read the following before beginning the survey: “Wealth, also known as net worth, is defined as the total value of everything someone owns minus any debt that he or she owes. A person's net worth includes his or her bank account savings plus the value of other things such as property, stocks, bonds, art, collections, etc., minus the value of things like loans and mortgages."

cperciva 16y ago
Requiring people to read the definition doesn't guarantee that they will understand it.
- jberryman 16y ago
  Of course. But wealth as defined in that sentence is not a difficult thing to understand. It's what everyone thinks about when they say someone is wealthy: they have a lot of stuff and a lot of money in the bank. I also disagree with pg's assessment; I find it hard to imagine peoples minds defaulting to thinking of percentage of income earned (what does that even mean?) over percentages of money and stuff owned.
- Alex3917 16y ago
  Does it really matter if they don't understand it though? At some level if the point of the exercise to show that Americans don't understand how wealth is distributed, then the fact that Americans don't know what wealth is almost tautologically proves the point. I realize there is a bit more nuance, but it's still pretty interesting as is.

Confusion 16y ago

I don't expect the same graphs for income to be qualitatively different. The point that people vastly overestimate the prosperity of the lower income classes remains standing.