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Andrew Gelman claims on his blog:

Upper-income people still don't realize they're upper-income

If people are directly asked whether they consider themselves to be upper income, do they underrate their relative wealth?

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    I can't vote this down but if I could I would give -1 for being off-topic. I'm not sure what this has to do with skepticism, and it seems to be more of a loaded political question, to me anyway. – erikthebassist Apr 20 '11 at 22:15
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    As far as I have been able to tell, it's about feeling secure. I know families that make US$250k/year and have a net worth in the neighborhood of US$1M, and they don't feel financially safe; they don't feel that they can step off the treadmill. The people I know who make US$30k/year and have roughly 0 net worth find this baffling. – dmckee Apr 20 '11 at 23:18
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    @erikthebassist - He's quoting a claim about how upper-income people perceive themselves on the income scale, and are asking for evidence - I don't at all see how that's off-topic or for that matter how it's politically loaded. Also this isn't a site about skepticism, it's about applying skepticism. – Kit Sunde Apr 20 '11 at 23:45
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    Reminds me of this (note: I don't care about politics, and have no political affiliation. I just thought this was funny) – BlueRaja - Danny Pflughoeft Apr 21 '11 at 6:24
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    I've seen more evidence of the opposite. Lower income people think they are upper income. – Apreche Apr 21 '11 at 12:10
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The blog makes that claim that upper income people don't think they are upper income because of discrepancies in the answers to two questions, asked of "upper income people". Specifically, "Is the amount of tax you pay too high, too low, or about right?" (to which most answered "too high") and "Do upper income people pay more or less than their fair share of tax?" (to which they mostly answered "less"). But there's a disconnect between the two questions. It's perfectly possible to believe that taxes are generally too high (including taxes on themselves, as upper-income people), but that upper-income people (including themselves) pay less than their fair share.

"Upper-income" is not a well-defined term, so if people don't consider themselves "upper-income" that's their opinion, and doesn't reflect a "lack of understanding" at all.

Looking for evidence to actually answer the question, I found this. It shows that people massively underestimate the fraction of wealth owned by the top few wealthy percent. In that sense people maybe overestimate how far up the income ladder (technically wealth ladder) they are.

  • My post doesn't raise the question of whether people think that upper income people raise their fair share. I don't think that underestimating the share of wealth has something directly to do with being able to judge your own situation. – Christian Apr 28 '11 at 14:25
  • Yes,your question didn't raise that. But the article which you cite as evidence for your claim did raise it. That's one of the reasons why the answer to the question "do they underrate their relative wealth?" might be no. – DJClayworth May 3 '11 at 14:58

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