Do Most Americans Favor Radical Wealth Redistribution?


Americans love competition. From media heroes to sports teams, fictional characters to starving artists, the nation's cultural mythology teems with tales of desperate struggles and victorious underdogs. What's more, Americans like to reward their scrappy heroes with fame, wealth and all the trappings of success.

This was borne out by an academic study in which the majority of respondents advocated an unequal division of national wealth, with more cash going to the rich and upper middle class and less going to the poor and working class. These findings aren't surprising: unequal distribution spurs competition, and great rewards spur great achievement. What is shocking, however, is the degree of inequality that most respondents preferred: 92% of respondents expressed a desire to replace America's wealth distribution system with one much closer to Sweden's.

Sweden has long been vilified by pundits who are concerned about government intervention in the market and "socialist" programs to redistribute wealth. Surprisingly, however, the notoriously left-leaning country is also home to a very popular model for wealth distribution. In 2005, Harvard University's Michael I. Norton and Duke University's Dan Ariely polled a cross-section of 5,522 citizens about their preferences for wealth division. Their results, which they recently published in "Building a Better America - One Wealth Quintile at a Time," demonstrate that most Americans have a severely skewed vision of America's wealth distribution, and a surprisingly radical outlook on where the country's money should actually go.

Reality Versus Perception

For their study, Norton and Ariely divided America into five groups, which could be described as the rich, the upper middle class, the middle class, the lower class, and the poor. Currently, 85% of America's wealth, which is defined as total assets minus total liabilities, is held by the country's richest 20%. Meanwhile the upper middle class holds 11%, the middle class has 4%, and the lower class and poor share an anemic 0.3%. In terms of actual money, this translates into average non-income holdings of $2.3 million per rich person, $291,000 per upper class person, $106,000 per middle class person and $22,000 per lower class or poor person.

Of course, wealth is different from income, but the divisions are significant there, as well. The rich enjoy a median income of $259,700 per year, compared to $74,700 for the upper middle, $46,700 for the middle, and $20,200 for the lower class and poor.

In the poll, the vast majority of Americans across the political, gender and wealth spectrum displayed a markedly skewed understanding of how America's money is divided. On average, respondents thought that the rich hold only 58% of the nation's wealth, 32% less than their actual holdings. They thought that the middle class controls 13% of the country's wealth, more than three times their actual holdings. As for the bottom 40% of the population, the assumption was that the lower class and poor own a measly 9% of the country's wealth. In reality, these two groups control about one thirtieth of that amount.

Who Should Get the Money?

Although the perception that America's wealth distribution is unfair cut across partisan lines, Republicans and Democrats disagreed about the ideal distribution. People who voted for George Bush believed that the richest 20% of the population deserved roughly 35% of the nation's wealth. Kerry voters radically disagreed: they felt that the rich deserved only about 30%. When it came to the country's poorest citizens, Bush voters felt that they deserved about 9% of the country's assets; Kerry voters preferred to give them 12%.

Respondents making over $100,000 per year, the group most heavily skewed toward a top-heavy distribution of wealth, advocated a system in which the top 20% received about 40% of the country's assets and the bottom 20% got roughly 7%. Yet even this comparatively Dickensian wealth distribution still gave America's rich less than half of their current holdings, while giving the poorest more than twenty times their current holdings.

There are a wide range of explanations for why Americans don't push for a more equitable distribution of wealth, but none of them are conclusive. What is clear, however, is that the country is moving in the wrong direction: since 1983, America's richest 20% have seen their share of the pie increase by about 4%, while the rest of the country has gotten ever-smaller slivers. The middle class, for example, has lost over 23% of its relative share of wealth, and the poorest 40% of the population has seen its tiny share slashed by a brutal 78%. What's more, with the potential continuation of Bush tax cuts, inheritance tax cuts, and a shockingly low capital gains tax, it looks like those numbers are going to get even worse.