Inequality, we keep hearing, will be a major theme of the upcoming election. Hillary Clinton has been preaching about it. Republicans are suddenly doing it, too. Both sides have been talking to the same eminent academics worried about what economic inequality could mean for the future of American children.
But here is an important point worth remembering about the electorate these candidates have been talking to: Most people — regardless of whether you ask about the poor or the rich, income or wealth, the shape of the income distribution or an individual's position in it — have a terrible sense of what inequality actually looks like.
This key point comes from a new National Bureau of Economic Research working paper by Vladimir Gimpelson at the Higher School of Economist in Moscow and Daniel Treisman at UCLA. They looked at several sets of international survey data gauging how much people know in many countries, including the United States, about economic inequality, the ways it's been changing and how their own incomes compare. Their conclusion, which minces no words:
In recent years, ordinary people have had little idea about such things. What they think they know is often wrong. Widespread ignorance and misperceptions of inequality emerge robustly, regardless of the data source, operationalization, and method of measurement.
People aren't good at guessing the share of the population that lives in poverty in their country (this comes from a European survey). We're not very accurate at estimating how much workers in various jobs earn (in the United States, we're not bad with shop assistants and unskilled factory workers, but we way overestimate what doctors and Cabinet secretaries make). We're also not that great at recognizing whether inequality and poverty are worsening or improving with time. And many of these surveys suggest that the rich think they're poorer than they really are while the poor think they're richer — a pattern that implies a lot of us like to think we're hanging out somewhere in the middle.
One survey used in the paper, the International Social Survey Project, asked people in 40 countries which type of society they thought they lived in:
The context of the question was economic. If we assume each of those bars is an equally spaced income group, Gimpelson and Treisman calculated a Gini coefficient, measuring income inequality, to correspond with each diagram. By that standard, worldwide only about a quarter of people got this right for their country (the share varies a little if you consider income before or after taxes and transfers). That's not much better than survey respondents would do if they were just guessing randomly.
People were particularly bad at this in Ukraine. They were a lot better in Norway. In America, 29 percent chose the correct picture — that would be diagram B — if you consider income after taxes and transfers. Another 23 percent of Americans said they couldn't chose an answer at all.
All of this undercuts the theory that there's a direct link between high inequality and poverty and what we want the government to do about them. It's hard to argue, for instance, that more people will support forms of income redistribution when inequality is high if most of us don't recognize what high inequality looks like.
Over the next year, Americans probably won't be able to avoid the message that inequality is real and bad. But, Treisman says, we'll all probably be picturing very different things in our minds when we hear that.