What Poverty Problem? Everyone I Know Has Money! - Pacific Standard

What Poverty Problem? Everyone I Know Has Money!

New research finds our social circles provide a skewed view of society, which can decrease support for redistributing wealth.
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(Photo: Hans Splinter/Shutterstock)

(Photo: Hans Splinter/Shutterstock)

There are good reasons why wealthy people are often reluctant to support policies, and political parties, that aim to distribute wealth more widely. For one thing, it isn't in their short-term self-interest (as their taxes would likely rise). For another, it goes against the conservative ideology many of them hold (which equates poverty with laziness or a lack of moral character).

Newly published research has identified yet another, even more basic explanation of why, in spite of the disturbing rise in income inequality, they tend to support the status quo. Their friends and acquaintances tend to inhabit the same economic strata as themselves, so a quick survey of their social circles suggests everything is just fine.

"Wealthier people tend to estimate that higher incomes are more common, and lower incomes less common, in the wider population," writes a research team led by University of Kent psychologist Rael Dawtry. "As a result, as people's own wealth increases, they tend to perceive higher mean levels of wealth in society."

"These results suggest that the rich and poor do not simply have different views about how wealth should be distributed across society. Rather, they subjectively experience living in societies that have subtle—but important—differences."

Even wealthy liberals tend to hang around with other wealthy people, and that inevitably skews their view of society, at least to some degree.

In the journal Psychological Science, Dawtry and colleagues Robbie Sutton and Chris Sibley describe three studies that demonstrate this dynamic. The first featured approximately 300 Americans of various income levels who were recruited online.

They were asked to think of each of their "social contacts"—defined as "adults you were in personal, face-to-face contact with at least twice this year"—and estimate their annual earnings. They then "estimated the distribution of annual household income across the entire U.S. population."

Afterwards, they noted the degree to which they felt household incomes are fairly distributed in the United States as a whole, and the extent to which they advocated redistributive policies such as high taxes on the wealthy.

In the second, similarly structured study, a different set of 300 or so Americans were asked to estimate the mean incomes of people in each of five brackets of the population (from the top 20 percent to the bottom 20 percent). They did so first for their friends and acquaintances, and then for the U.S. as a whole. Finally, they answered the same questions about fairness and income-redistribution policies.

In both studies, "Wealthier (relative to poorer) Americans reported moving in wealthier social circles, and extrapolated from them when estimating wealth levels across America as a whole," the researchers report. "In turn, these estimates were associated with the perceived fairness of wealth distribution in America."

In other words, the rich live in a relatively affluent America populated by people for whom the current economic system is working quite well. Thus, in their minds, there is no real need to distribute wealth more equally.

Not surprisingly, Dawtry and his colleagues found conservative political ideology and perceived self-interest also diminished support for redistributive social policies. But when they took those factors out of the equation, the "social sampling" effect described above still influenced participants' perceptions and opinions. Even wealthy liberals tend to hang around with other wealthy people, and that inevitably skews their view of society, at least to some degree.

A final study found this same phenomenon in New Zealand, suggesting Americans are not unique in this regard. Why would we be? It's human nature to compare ourselves to the people we know and make inferences from this knowledge.

But that suggests that, as our social circles become more and more stratified, our understanding of how other people live is getting more and more out of touch with reality.

Findings is a daily column by Pacific Standard staff writer Tom Jacobs, who scours the psychological-research journals to discover new insights into human behavior, ranging from the origins of our political beliefs to the cultivation of creativity.

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