Rich or poor? We’re not sure…
Back in May, we asked you a simple question – are you rich or poor? For once, this question wasn’t rhetorical. Thanks to the OECD’s Compare Your Income tool, you could actually check for yourself where you stood on the income scale – rolling around in money or struggling to make ends meet.
Since the launch of Compare Your Income, more than a million people worldwide have completed the survey. And the answer we’ve all given to that question – are you rich or poor? – is absolutely clear: We’ve no idea.
In other words, if we’re rich, we think we’re poorer than we are; if we’re poor, we think we’re richer.
It’s true that these are still early findings and cover just three countries – France, Mexico and the United States. But, they do suggest that many of us have only a dim understanding of whether we’re doing better or worse than our neighbours. In France, only 1 in 6 people correctly guessed if they were high, medium or low earners; in Mexico it was 1 in 8; and in the United States it was just 1 in 10.
The people who were most likely to guess their position on the income scale correctly were middle-earners. By contrast, the people who most often got it wrong were the very highest and lowest earners. Among low earners, most underestimated just how far behind they were compared to everyone else. But the well-off, too, were almost as likely to get it wrong, often dramatically so. More than half of top earners in the U.S. and Mexico actually thought they belonged down in the bottom half of the income distribution.
Presumably, these top earners didn’t comprehend just how well they were doing compared with everyone else. If that’s the case, it seems to echo other research suggesting that a high income may not bring much of a sense of economic security. For example, a few years ago Boston College managed the rare feat of getting some millionaires and a couple of billionaires to talk frankly about the joys and dilemmas of being rich. Amid the findings, perhaps the most surprising aspect of being well off was that people still seemed to worry a lot about money. As Graeme Wood wrote in The Atlantic, despite sitting on assets worth tens of millions of dollars, most said “they would require on average one-quarter more wealth than they currently possess”. One heir to a vast fortune admitted that “he wouldn’t feel financially secure until he had $1 billion in the bank”.
Income perceptions aren’t the only issue under examination in the Compare Your Income survey. Among a number of issues, it also looks at people’s attitudes to how the economic pie is sliced up – what percentage of national income goes to top earners and how much should they earn?
Here, again, people’s understanding of the facts seemed to be at odds with reality. For example, French respondents believed that about 60% of the country’s income goes to the top 10% of earners. The actual figure is rather lower – around 25%. And when respondents were asked how large a share of income should go to top earners, they actually opted for a figure in excess of the reality – about 30%.
Speculating again, it’s possible here that respondents are confusing income and wealth. In extremely basic terms, income is the money you receive at the end of every week or month in your paycheque and wealth is the money that’s – hopefully – building up over time in your bank account (as well as other assets). Wealth is, indeed, spread out much more unequally than income: In OECD countries, the top 10% of wealth owners hold about half of all household income, according to In It Together, a recent OECD report.
Think you can do better than the million-plus people who’ve already taken part in the Compare Your Income survey? There’s still time to have a go – just follow the link below.