In Defence of Liberty

Driven by data; ridden with liberty.

An Illusion of Sweden Resurrected

(Video thanks to politizane)

Receiving over 5 million views, the video Wealth Inequality in America has widespread acclaim, and presents its underlying data in a beautiful manner. The narrator begins morosely “There is a chart I saw recently that I can’t get out of my head”, before showing a graph demonstrating what “over 5,000 Americans” thought the wealth inequality in the United States is, what they want it to be and what the wealth disparity actually is, expressed as quintiles. The source of this data is a paper by Professor Ariely and Professor Michael I. Norton, entitled Building a Better America – One Wealth Quintile at a Time. I have written previously about this paper, in An Illusion of Sweden.

Backed by minimalist piano, the narrator discusses the difference between the collective ideal of 5,522 Americans, the consensus perception and reality. The disparity between their equitable ideals and their consensus view is “telling” according to the narrator, showing that “most Americans know that the system is already skewed unfairly”. The ‘ideal’ distribution according to the respondents is one where the top quintile holds 30-39% of the total wealth – this is more equitable than any recorded developed nation. It is part of the human condition to hold impossible ideals.  The interplays between age demographics, family size, education, skills and economic growth in determining the overall wealth distribution are unfathomably complicated, and so a person may not know if they are proposing an unachievable wealth distribution. Given that the survey responders believed that the ideal distribution is far more equitable than any developed nation, it reveals that these responders would perceive any recorded distribution as “unfair”.

The differences between the 'ideal' wealth distribution, the consensus perception and reality. (Photo: Mother Jones)

The differences between the ‘ideal’ wealth distribution, the consensus perception and reality. (Photo: Mother Jones)

“Shocking” Differences

The “shocking” difference between the consensus perception and real distribution is highlighted. However, the wealth inequality given by the responders is, approximately, the income distribution in the United States. These statistics are far more widely disseminated and discussed, and despite their incomparability to the statistics on wealth, would be recited by a worried survey replier. It is simply rational ignorance, as most people do not seek out the statistics on wealth distribution and would choose to use their time in different ways, which explains this disparity. Thankfully absent from this video, but common within radical political movements, is the assertion that this lack of knowledge is due to a deliberate misinformation campaign by a deviant and subservient mass media.

The claim is made that “the bottom 40% barely have any wealth”, but the demarcations of America society of wealth quintiles is, by definition, relative not absolute. Thus, corollaries made about the “struggling” poor and middle class “down to pocket change” do not represent the underlying realities. This is reiterated in a beautiful graph with small green piles of money representing money amongst 100 representative people. Numerous claims are made about the top 1% of income earners, but these claims conflate the distinct notions of income and wealth. The narrator wonders, leaning to a negative answer, if a CEO “is working 380 times harder than their average employee”. Pay is not a retrospective reward for hard work, but as a prospective incentive for future work.

False Choices

Despite its consumable format, this video carries all the weaknesses of the original research paper. Poorly analysed survey data does not gain better analysis through superior presentation. Professor Norton originally wanted to explore “whether educating Americans about the current level of wealth inequality (by showing them charts and pictures) might increase their support for reducing this inequality”. The paper itself failed to do that, putting forward false choices and exposing the misunderstandings that occur over wealth statistics.

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This entry was posted on March 26, 2013 by in American Politics and tagged , , , , .
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