Income Disparity in America -- Why is it Tolerated?

A recent study by Azim Shariff[1] and colleagues revealed an interesting link between the perception of upward mobility and how comfortable people are with income disparity. Shariff found that when primed to believe in the possibility of upward mobility people were more likely to accept income disparity than when primed to think that upward mobility was unlikely.

This may look like one of those “well, yeah — duh” results but it’s worth a closer examination because of the factors underlying it.

First, it’s obvious that when people believe that they too can “make it” they will be less upset by the gap between where they are now and where they think they might be in the future. This effect was seen in Washington State in 2012 when a proposition to impose a state income tax was voted down. The tax wouldn’t kick in until someone was making over $200,000 a year. Many who would have clearly benefited from the revenue the levy would have generated said they voted against it because they were hoping to be making that much in the future and didn’t want their income taxed. The median per capita income in the state, in case anyone’s curious, is $30,000 and the median household income is $60,000.

Shariff’s data also showed an interaction with the extent to which folks believe that their current economic status is due to their own efforts as opposed to outside forces. Those who felt responsible for their circumstances were more tolerant of income inequality.

This finding fits within what’s known as Attribution Theory — an approach that examines how people make attributions about events and circumstances. One of the prominent models is that developed by Julian Rotter who was the first to notice that people could be placed along a continuum from External (E) to Internal (I) forms of attribution. Those who Externalized tend to attribute events, status and circumstances to external forces. Failures get blamed on bad luck or the actions of nefarious others or favoritism that worked against them. Successes tend to be credited to good luck or being in the right place or just having connections.

Internalizers, on the other hand, tend to take credit for their success and responsibility for failures. But — and here’s the fun part — these patterns of attribution don’t necessarily have anything to do with reality. These are the ways in which people “attribute” outcomes, not whether or not they were actually instrumental in bringing them about. And one reason for this disconnect is the last factor I want to toss in this mix: luck.

Most of us, whether we tend toward the E or the I pole of the continuum, have had our circumstances shaped to a considerable extent by flukes, chance outcomes, random events that ended up smoothing our way or putting barriers in front of us.[2] And we typically lack awareness of the impact of these events in determining where we are and where we will be in the future.

When you put all these variables together you can begin to appreciate why the country is so willing to live with horrific — and growing — levels of income disparity. Lower income folks who believe in “The American Dream” keep dreaming that they will, one day, be wealthy and are unconcerned that some are making more than they are. Low income folks who are Internalizers believe that their lot is due to the choices they’ve made. Those who are better off, they assume, made better choices and deserve the riches they have.

Wealthy Internalizers feel that their status is because they worked hard and they blame others for a lack of focus or poor decision-making. Externalizers who are well-off acknowledge the role of the random in their good fortune but are willing to live with income disparity since they believe it’s largely just the luck of the draw anyway.

Who’s left? Not many. Those concerned about income disparity recognize the psychological, sociological and cultural damage it does and also have a balanced view of the contributions of personal choice and chance. I’ve not seen any studies on this cohort but I suspect that we (I consider myself part of this group) tilt toward the Internalizer pole on Rotter’s continuum while appreciating that there were more than a few chancy things that happened in our lives that helped propel us. We don’t have illusions about the poor being able to suddenly transport themselves into the country club set. We recognize that social forces work against the poor and note that an awful lot of those in the top 1% got there by means other than hard work.[3]

There aren’t that many of us with this cognitive, social psychological profile and therein lies the problem.

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[1] Disclaimer: I’ve known Azim for some time now. He did his Ph.D. with Ara Noranzayan at the University fo British Columbia in Vancouver where I hold a Visiting Professorship. I’ve been following his career ever since and note that this year he was named one of the “Rising Stars” in social psychology by the American Psychological Association.

[2] Malcolm Gladwell’s book “Outliers” is a nice, historical exploration of the role of these chancy elements in life.

[3] Of the top twenty wealthiest Americans only one started out poor. Seven of them inherited their fortune.