Great post by Tyler Cown of Marginal Revolution.

Income inequality is not as extreme as many citizens think

by Tyler Cowen on January 23, 2014 at 3:58 am in Data Source, Economics | Permalink

Here is a recent Gallup poll of interest, suggesting many people are unhappy with the level of income inequality.  Alternatively, here is a new paper to warm Bryan Caplan’s heart, by John R. Chambers, Lawton K. Swan, and Martin Heesacker, entitled “Better Off Than We Know: Distorted Perceptions of Incomes and Income Inequality in America”:

Three studies examined Americans’ perceptions of incomes and income inequality using a variety of criterion measures. Contrary to recent findings indicating that Americans underestimate wealth inequality, we found that Americans not only overestimated the rise of income inequality over time, but also underestimated average incomes. Thus, economic conditions in America are more favorable than people seem to realize. Furthermore, ideological differences emerged in two of these studies, such that political liberals overestimated the rise of inequality more than political conservatives. Implications of these findings for public policy debates and ideological disagreements are discussed.

There is this bit:

Most participants (76%) incorrectly selected the higher value ($681,649) as the cutoff for the top 1% of earners, magnifying the level of income it takes to qualify as a “1 percenter.”

There are different measures, but I think of 380k as the relevant cut-off point for the top one percent.  Here is a useful Atlantic write-up of the piece.  I cannot find an ungated version, can you?
I thank Veronique de Rugy and Scott Winship for relevant pointers.

- See more at: http://marginalrevolution.com/marginalrevolution/2014/01/income-inequality-is-not-as-extreme-as-many-citizens-think.html#sthash.ljVpcMiU.dpuf

Income inequality is not as extreme as many citizens think

by Tyler Cowen on January 23, 2014 at 3:58 am in Data Source, Economics | Permalink

Here is a recent Gallup poll of interest, suggesting many people are unhappy with the level of income inequality.  Alternatively, here is a new paper to warm Bryan Caplan’s heart, by John R. Chambers, Lawton K. Swan, and Martin Heesacker, entitled “Better Off Than We Know: Distorted Perceptions of Incomes and Income Inequality in America”:

Three studies examined Americans’ perceptions of incomes and income inequality using a variety of criterion measures. Contrary to recent findings indicating that Americans underestimate wealth inequality, we found that Americans not only overestimated the rise of income inequality over time, but also underestimated average incomes. Thus, economic conditions in America are more favorable than people seem to realize. Furthermore, ideological differences emerged in two of these studies, such that political liberals overestimated the rise of inequality more than political conservatives. Implications of these findings for public policy debates and ideological disagreements are discussed.

There is this bit:

Most participants (76%) incorrectly selected the higher value ($681,649) as the cutoff for the top 1% of earners, magnifying the level of income it takes to qualify as a “1 percenter.”

There are different measures, but I think of 380k as the relevant cut-off point for the top one percent.  Here is a useful Atlantic write-up of the piece.  I cannot find an ungated version, can you?
I thank Veronique de Rugy and Scott Winship for relevant pointers.

- See more at: http://marginalrevolution.com/marginalrevolution/2014/01/income-inequality-is-not-as-extreme-as-many-citizens-think.html#sthash.ljVpcMiU.dpuf

"Here is a recent Gallup poll of interest, suggesting many people are unhappy with the level of income inequality.  Alternatively, here is a new paper to warm Bryan Caplan’s heart, by John R. Chambers, Lawton K. Swan, and Martin Heesacker, entitled “Better Off Than We Know: Distorted Perceptions of Incomes and Income Inequality in America”:

Three studies examined Americans’ perceptions of incomes and income inequality using a variety of criterion measures. Contrary to recent findings indicating that Americans underestimate wealth inequality, we found that Americans not only overestimated the rise of income inequality over time, but also underestimated average incomes. Thus, economic conditions in America are more favorable than people seem to realize. Furthermore, ideological differences emerged in two of these studies, such that political liberals overestimated the rise of inequality more than political conservatives. Implications of these findings for public policy debates and ideological disagreements are discussed.

There is this bit:

Most participants (76%) incorrectly selected the higher value ($681,649) as the cutoff for the top 1% of earners, magnifying the level of income it takes to qualify as a “1 percenter.”

There are different measures, but I think of 380k as the relevant cut-off point for the top one percent.  Here is a useful Atlantic write-up of the piece.  I cannot find an ungated version, can you?

I thank Veronique de Rugy and Scott Winship for relevant pointers."