HBR IdeaCast We’re Bad at Measuring Inequality—Here’s Why That Matters
Jan 4, 2022
Stefanie Stantcheva, a Harvard economist and founder of the Social Economics Lab, dives into the complexities of measuring economic inequality and our flawed perceptions of it. She discusses how misjudging income can skew public support for policies, often influenced by political beliefs. Stantcheva reveals surprising facts about the American dream and social mobility, contrasting U.S. views with European perspectives. She also explores how racial attitudes affect support for economic interventions, emphasizing the need for awareness in addressing inequality.
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Income Misperception Among Coworkers
- People misperceive their income rank within their workplace.
- They are better at ranking themselves among former schoolmates or neighbors.
Impact of Income Misperception on Policy Views
- Lower-income individuals tend to underestimate others' incomes, leading to support for less redistributive policies.
- Higher-income individuals overestimate others' incomes, leading to similar policy preferences.
Misconceptions about the American Dream
- Americans tend to overestimate upward mobility, particularly the "rags-to-riches" American dream.
- This optimism can influence support for policies addressing inequality.