92 percent prefer Swedish model to US model when given a choice

Americans generally underestimate the degree of income inequality in the United States, and if given a choice, would distribute wealth in a similar way to the social democracies of Scandinavia, a new study finds.

For decades, polls have shown that a plurality of Americans — around 40 percent — consider themselves conservative, while only around 20 percent self-identify as liberals. But a new study from two noted economists casts doubt on what values lie beneath those political labels.

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According to research (PDF) carried out by Michael I. Norton of Harvard Business School and Dan Ariely of Duke University, and flagged by Paul Kedrosky at the Infectious Greed blog, 92 percent of Americans would choose to live in a society with far less income disparity than the US, choosing Sweden’s model over that of the US.

What’s more, the study’s authors say that this applies to people of all income levels and all political leanings: The poor and the rich, Democrats and Republicans are all equally likely to choose the Swedish model.

But the study also found that respondents preferred Sweden’s model over a model of perfect income equality for everyone, “suggesting that Americans prefer some inequality to perfect equality, but not to the degree currently present in the United States,” the authors state.

Recent analyses have shown that income inequality in the US has grown steadily for the past three decades and reached its highest level on record, exceeding even the large disparities seen in the 1920s, before the Great Depression. Norton and Ariely estimate that the one percent wealthiest Americans hold nearly 50 percent of the country’s wealth, while the richest 20 percent hold 84 percent of the wealth.

But in their study, the authors found Americans generally underestimate the income disparity. When asked to estimate, respondents on average estimated that the top 20 percent have 59 percent of the wealth (as opposed to the real number, 84 percent). And when asked to choose how much the top 20 percent should have, on average respondents said 32 percent — a number similar to the wealth distribution seen in Sweden.

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“What is most striking” about the results, argue the authors, is that they show “more consensus than disagreement among … different demographic groups. All groups – even the wealthiest respondents – desired a more equal distribution of wealth than what they estimated the current United States level to be, while all groups also desired some inequality – even the poorest respondents.”

The authors suggest the reason that American voters have not made more of an issue of the growing income gap is that they may simply not be aware of it. “Second, just as people have erroneous beliefs about the actual level of wealth inequality, they may also hold overly optimistic beliefs about opportunities for social mobility in the United States, beliefs which in turn may drive support for unequal distributions of wealth,” they write.

The authors also note that, though there may be widespread agreement about income inequality, there is no agreement on what caused it or what should be done about it.

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“Americans exhibit a general disconnect between their attitudes towards economic inequality and their self-interest and public policy preferences, suggesting that even given increased awareness of the gap between ideal and actual wealth distributions, Americans may remain unlikely to advocate for policies that would narrow this gap,” the authors argue.

Norton and Ariely’s survey was carried out on 5,522 respondents in 47 states in December of 2005. The results are to be published in the journal Perspectives on Psychological Science.