The ‘wealth’ video examined

This video, already viewed by about 800,000 people since it came out last November is, for some reason, racing around the Internet with new abandon today.

It’s not that it’s not interesting. It certainly is. It’s just that it’s not that new. It’s based on a study that actually was released in 2010 by Michael Norton, of Harvard Business School. He co-authored the paper.

He talked to Steve Inskeep about it back in 2010.And almost two years ago, PBS Newshour tried to recreate Norton’s (and his colleague’s) work. It presented several pie charts of countries’ distribution of wealth and asked people which country they’d like to live in.

Pie Chart C, based on Norton’s work, was actually the United States, although the country wasn’t named. Only 9 percent of people who took the survey said they wanted to live there.

The exercise was done as part of a series on inequality in the United States.

Watch Americans Facing More Inequality, More Debt and Now More Trouble? on PBS. See more from PBS NewsHour.

“It’s probably a good thing that the public underestimates how much wealth inequality there is,” Bryan D. Caplan of George Mason University told Business Week back in 2010, since “they tend not to understand the ways that wealth inequality is good.”

In Harvard Business Review a little over a year ago, Norton’s colleague had his own theories — that the survey reflects how we view ourselves:

Norton and his coauthor, Dan Ariely (author of the popular title Predictably Irrational and a professor of behavioral economics at Duke), believe that one reason perceptions are so skewed is because the easy availability of credit masks people’s real financial situation. If your neighbors own the same make and model of car that you own, Norton points out, there’s no way to know whether they paid cash for theirs or took out a loan for the full amount. It’s easy, he says, to think, “I have a car and you have a car, so I guess wealth is equally distributed.” This perception is reinforced by the fact that people tend to interact primarily within their own social stratum.

What is surprising given these circumstances, says Norton, is that Americans at all income levels–the very rich as well as the very poor–said they would like wealth to be more evenly distributed.

Given that there’s been so much written and reported about the haves, have-somes, have-most, and have-nots, in the last few years, there seems to be more at work here in people’s incorrect perceptions of the distribution of wealth in the U.S. It’s about how wealth is redistributed.

Both Republicans and Democrats, Norton said, had roughly the same responses to the original survey and generally agreed on the way wealth should be distributed.

As it makes its way across Viralville today, it’s mostly attached as a justification that one way is preferred, but that’s not at all what the original paper said.

Still, it’s a good starting point — and an unusual starting point — in today’s public policy debate — figuring out on what we all agree.

  • Albatross

    It’s worth noting at the same time that the Associated Press is running sob-stories for the super-wealthy, painting them as the victims of high tax rates. This propaganda relies strongly upon the public NOT understanding what this video goes to great pains to illustrate – the mind-boggling amount of wealth being hoarded by the ultra-rich.

    It doesn’t matter how old this video is or the age of the study behind it. What’s important is that the public sees it.

    America is about six times more productive today than in 1980, yet we’re earning about the same or a little less, adjusted for inflation. That means that since 1980 NONE of the extra wealth that workers have created through increases in productivity has been shared with us. NONE. That’s dinner with the family and weekends with the grandparents and two week vacations, all NOT taken by Americans, so that it can be squirreled away in the overseas banks of some pathologically greedy individual desperate to move from Forbes’ #43 to #42 richest person in the world.

    This wealth disparity isn’t just bad for the economy, it’s immoral.

  • Bob Collins

    // it as fast as possible, mostly on booze, cigarettes and Doritos

    While I imagine there’s the occasional anecdote to be supplied, I doubt very much this is a statistically valid statement.

    // The wealthy are wealthy because they didn’t piss away what came their way.

    It would be interesting to see how the breakdown of attained wealth works. In other words, what percentage of wealth is “old money” vs “new money.”

  • DanA

    / Bryan D. Caplan of George Mason “they tend not to understand the ways that wealth inequality is good.”/

    Other than philanthropy, I can’t come up with much. Maybe Prof. Caplan can enlighten?

  • Bob Collins

    I deleted all of “jimmy”‘s comments. He supplied a fake email and was obviously trolling.

    Here’s a reminder that all commenters must provide a valid email address when submitting comments.

    And thanks!

  • Janae

    Jimmy – I am a member of what can be considered the “working poor”. I have had a job ever since I was legally allowed to work. The same with my husband. At one point he held 3 jobs at once. We have two children and we work our butts off trying to provide for them and keep a roof over our head and food (not Doritos) on the damn table. We are FAR from lazy and in most cases, I think we work even HARDER than the superwealthy. I’m even trying to find a way to go back to school while working and being a mother to better our situation. So, your statement is not only generalizing a whole socio-economic group, it’s DEAD wrong in most cases. Practically all the families I know who are considered the working poor all work just as hard as we do (and none of us are chain smoking alcoholics, thank you very much!!) And it makes me so angry that there are so many individuasl like yourself that feel this way, with your “let them eat cake” attitude while my husband and I work our fingers to the bone for very little pay which goes directly to our children and home. Please educate yourself before you make ignorant, blanket statements like that.

  • Karen

    The video went viral today because George Takei posted it on his Facebook page. With 3.5 million likes on FB, it’s easy for things he posts to go viral.

  • John Galt

    $50 trillion in wealth globally. 6.9 billion people. Divided equally and we get an amazing $7260 per person. Congrats!