It seems like we hear about economic inequality on a near-daily basis in the U.S., and often the news seems to contradict itself. One study claims that economic inequality hasn’t improved in 50 years, while another claims that the national economy is naturally “fluid,” and yet another claims that the rich are just as affected by economic downturns as the rest of us.
But while the realities and myths of inequality in the U.S. continue to be a hot topic, debated and analyzed on a near-daily basis, some researchers are beginning to chart a different course with respect to the topic, instead examining how our view of economic equality and inequality affects things like our physical health, and even our mental and emotional well-being.
Still more recently, Michael W. Kraus and Jacinth J.X. Tan, researchers from the University of Illinois Urban Champaign, set out to determine whether Americans have a distorted or misinformed viewpoint when it comes to economic mobility in the U.S.
The results were surprisingly stark. “Americans,” Kraus and Tan found, are largely “unaware of the actual economic structure of society and how changes in individuals’ economic conditions shape their own life outcomes.” The researchers added that “Americans tend to overestimate the extent that people can move up (or down) the social class hierarchy.” Further, Kraus and Tan found that Americans’ mobility estimates “exceeded actual class mobility by more than 19 percentage points.”
Meanwhile, according to the study, “the United States is faced with record levels of income inequality and one of the lowest rates of actual social mobility among industrial nations.”
Kraus and Tan have several theories as to why Americans tend to grossly overestimate their actual economic mobility within society, positing that inculcated ideas, such as the infamous and ever-present “American Dream,” play a large role. “Americans benefit from overestimates of social class mobility,” the researchers write, “because they bolster widely held American ideals of meritocracy and equality of opportunity.”
Additionally, “overestimates of social mobility satisfy the need to believe that the societal status of the self and others is determined fairly and justly,” Kraus and Tan added, indicating that there is a certain psychological need for individuals (in America, anyway) to believe that economic standing and status is the result of merit and justice. The researchers note that, in a sense, this overestimation of economic mobility is motivated by a need to “protect the self — especially with regard to economic outcomes.”
Kraus and Tan also noted that there is a lot of misinformation circulating when it comes to economic mobility in the United States, which leaves Americans with only their “personal anecdotes” to go on as a measure of mobility. It’s worth noting here that perhaps the most American of stories is that of the underdog who made it big; stories of success and mobility, in other words, are the stories Americans regularly tell each other.
Kraus and Tan also found that certain demographics are more likely to overestimate economic mobility than others, noting that young people are more likely to overestimate their ability to move up or down in society than their older counterparts, who, likely through their own experiences, assume that their position in society is more fixed. These divisions based on age exist regardless of the individual’s political ideology or “trait optimism.”
Those with higher levels of education, the researchers add, are also more likely to see their positions in society as being more fixed, for a fairly straightforward reason. “People with higher educational attainment tend to be better informed (through their education) about economic mobility in America.”
Both lower-class and wealthy individuals tend to overestimate economic mobility. In the case of the relatively lower-class individuals, this overestimation is likely the result of the hope and faith that mobility is in fact possible, while for wealthier individuals, overestimating economic mobility is the result of a “motivation to believe that one’s elevated position in society is both fairly achieved and possible for all Americans.” Kraus and Tan added that “people with higher status are happier when they believe that positive outcomes in society are based on merit,” despite the fact that this is generally far from the reality.
So, how important is economic mobility anyway? Quite important, as it turns out. Economic mobility, or an individual’s ability to move up (or down) the social class hierarchy is a driving force behind economic inequality, or the percentage of Americans who are wealthy vs. the percentage who are poor. According to Kraus and Tan, previous research indicates that “Americans report elevated happiness in years where economic inequality is lower compared to years where it is higher.” Further, “70 percent of studies examining the health impacts of economic inequality find that societal health worsens as economic inequality intensifies.”
Despite the progress we think we’ve made in the last 50 years, Pew Research Trusts notes that a phenomenon known as “stickiness at the ends,” persists even into the 21st century. “Stickiness at the ends” refers to both “ends” of the spectrum from the poorest of the poor to wealthiest of the wealthy, and the tendency for those raised in either extreme poverty or in extreme wealth to remain poor and wealthy, respectively.
Indeed, “Seventy percent of children raised in the bottom fifth of the income distribution will remain below the middle of the income ladder as adults.” Meanwhile, “among children raised in the top fifth, 63 percent will never fall below the middle.”
In other words, the War on Poverty, which started more than 50 years ago, is far from over.