Wednesday, April 20, 2011

The Illusion of Money Part 2: The Rich Think They're Broke

Great article over at Good today (why do you think they gave it that name?) with charts and graphs and all that stuff. Comes to the fascinating sociological conclusion that the wealthiest Americans don't realize that they're making more than everyone else. Folks who make $250,000 know they're not poor, but they compare themselves to the Warren Buffets of the world and see themselves as being in the middle:

Only 6 percent of people making $250,000 say their own taxes are too low, but 30 percent of people making $250,000 say that "upper-income people" pay too little in taxes. That suggests that a large number of people making $250,000 don't think of themselves as being "upper-income people."

The bottom line is that many wealthy people have simply no idea how wealthy they are relative to the rest of Americans. Chalk that up partially to a consumer culture that was for years defined by living outside of one's means. Thus, even rich people found themselves struggling to pay bills when the economy went south.

Catherine Rampell at the New York Times also theorizes it's the "Middle Kingdom effect": "[P]eople who are rich but not the richest—in the $250,000 zone, say—see they have more than lots of poor people, but also much less than a few very visibly rich people. Then they conclude they’re in the middle, so they must be middle class."