Inequality between the rich and poor in the United States is not just about the dollars and cents in people’s bank accounts. Sometimes, the more powerful factor in people’s futures is not how much money they grew up with, but the expectations they were taught to have.
Carol Graham, a scholar at the Brookings Institution who studies happiness and well-being, argues that inequality shapes people’s hopes and beliefs about the future, and that those perceptions are passed down to future generations just as surely as an inheritance would be. Today, 62 percent of Americans think their children will be worse off than they are.
In a new book, “Happiness for All?: Unequal Lives and Hopes in Pursuit of the American Dream,” Graham argues that people’s hopes about the future often end up being self-fulfilling. Those who believe in their future are more likely to invest in it. For poor people with little time and money to spend on building a better future, hope and optimism are even more important.
Graham is one of a few scholars who have traced the effects of a dramatic increase in inequality between the rich and the poor in America. But unlike others — like economist Anne Case and Nobel Prize-winner Angus Deaton, who famously noted the correlation between inequality and opioid overdoses, suicides and other “deaths of despair” — she has focused on the role of hope and optimism, and found some stunning differences in the perceptions of poor whites, blacks and Hispanics.
This interview has been edited for length and clarity.
Ideas about inequality vary by income. In your book, you note wealthy Americans are more likely to believe that hard work results in wealth compared with wealthy people in Latin America and the Caribbean. But for poor people, the trends are the opposite — poor people in the U.S. are less likely to believe that hard work results in wealth than the poor in Latin America. Does that reflect a worrying polarization between the rich and the poor in the U.S.?
I think so. When I got that finding, that blew me away, because this was a classic American Dream question. And that finding was very different from attitudes we saw in previous years.
Over the past couple of decades, inequality has increased in the U.S. at an impressive rate. But public attitudes lagged behind it. For a long time, people still thought of the U.S. as the land of opportunity, and saw inequality as a sign that ‘I can get ahead.’ There’s this great paper published in the early 2000s, where researchers find that few people in the U.S. were bothered by inequality except for left-leaning rich people.
When I saw that survey data about the difference between the U.S. and Latin America, it struck me that things had really changed. The gaps between poor and rich were so big here, whereas in Latin America there was more of a consensus. The financial crisis played a role, but things may have gradually been changing. I think what we’re seeing with high school educated blue-collar workers, when there is a whack at the economy, already vulnerable sectors do not recover. Meanwhile, we’ve seen top-driven inequality become the new normal, with huge levels of net worth at the top that are so far beyond anything the average person can conceive of. We have a lot more exposure through the media to billionaires like Bill Gates or Mark Zuckerberg or the Kardashians. My guess is if you’re in a coal-mining town in Appalachia, that could make you angry.
There is a lot of anger and resentment now, particularly among blue-collar whites. But we still haven’t had a decent public discussion about inequality, perhaps because there’s still this attitude that any government handout is bad. Inequality didn’t really surface in our public discussions in the U.S. until Bernie Sanders. He was the first politician to really make it a central part of his platform.
It seems to me that inequality is a major topic in U.S. politics, but the way we talk about it is very political and polarized. Like the words people use differ by political party.
Absolutely. ‘Make America Great Again’ was in large part about people falling behind, but the word inequality didn’t come in there once.
You write about how inequality affects people’s hopes and beliefs, and how those hopes are passed down through generations. How is that affecting poor Americans?
When I first started doing this research on well-being and happiness it was still considered crazy stuff. We basically wanted to know: Does happiness cause anything? When people have a more positive attitude, does that link to future outcomes? We isolated what we call residual happiness, each individual’s level of happiness that wasn’t explained by variations in their age, income and gender. We found that people who had higher levels of optimism about their future had better outcomes in the labor market and in health.
If you think about unskilled labor markets, more cheerful, can-do people are just more likely to succeed. But the other part is a beliefs-behaviors channel that we’ve documented where, if people believe in their future, they’re more likely to invest in it. That really matters to people with less money. If you’ve got a ton of money, it’s pretty easy to invest in your kids’ education. But if you’re scraping by anyway, making investments in the future are hard, and you have to really believe in order to do so. If a good future is so far from anything you can conceive of, that is an additional barrier to your success.
One thing we’re trying to do in current research is tweak hope about the future for people who are really poor. It turns out it really makes a difference. In Peru, we’re working with 18- to 19-year-olds in poor parts of Lima. They’re at an age where they’re making choices about their future. We’re trying to provide examples of people like them who have gone on to do well, to try and give them hope.
When you looked into inequality and hope, you found some really interesting differences between poor whites, blacks and Hispanics, right?
Yes. One of the things we find is that there is really low optimism for the future among poor whites, and desperation and suicide. Even though Hispanics and blacks are equally poor and probably more disadvantaged on many fronts, they maintain much higher levels of optimism about the future, and they’re not suffering from the same levels of suicide and depression.
When I first got this finding I thought, oh my god, it’s got to be a data problem. Finally I realized this data was robust, and then. So I wrote Angus and I said, 'Your data and my data are telling a very similar story.' That was just the beginning.
I don’t think we fully understand everything going on. But one reason it differs is minorities are still making gradual progress, even though they face a lot of discrimination. Poor whites are actually seeing downward mobility, maybe not in terms of actual income, but in terms of how they live compared with their parents, of their status, stability, and having a job that is respected. I do know even a lot of the behavioral literature shows that people really value losses disproportionately to gains. So it’s worse to be slightly better off and falling behind than it is to be poorer with hope that you can go further.
There’s also something about community that I find really contrasts. If you think about the makeup of rural places where many poor whites live, they’re socially isolated. Everybody drives everywhere, and the distances are huge. For people in places like that, your job was your place of social interaction, and if you lose that there isn’t much left. Meanwhile, blacks are the group that is most likely to report that religion is important in their life. Hispanics in the same way have their families. We control for religion, so that’s not driving our findings. But there are things that a community provides that you can’t measure or observe directly.
Another thing that psychologists show is that blacks and Hispanics are less likely to get depressed and commit suicide when they have negative shocks. I’ve seen this with very poor people in the developing world. People adapt to negative shocks and challenges and keep going, and blacks and Hispanics have had to deal with a lot of negative stuff. If you think of what migrants go through to get to this country — we can’t even fathom the sacrifice.
Having done a lot of work in poor countries, there’s something about being poor in a rich country that is particularly hard. This sounds depressing, but I don’t know how easy it will be to turn around hope in a very rich country.
This all gives a pretty dark picture of the U.S., doesn’t it?
Not all of the U.S. As much as we want to understand poor white desperation, and as much as we shouldn’t forget that blacks and Hispanics still face a lot of challenges and discrimination, I think a big part of the story is understanding their resilience. Why do some people maintain hope, when they’re not advantaged in terms of education, skills or jobs?
There’s scholarly work on how there are jobs available in the service sector, and either women or minorities take them, but unemployed white men won’t. The other part of the story is that people move less than they used to. It strikes me that understanding resilience among minorities and immigrants, who are more willing to move to find work, is helpful. Otherwise it paints a very depressing picture.
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