For all that wealth inequality is now discussed in America, people consistently under- and overestimate their own place on the wealth spectrum. The wealthy think they’re middle class. The poor think they’re middle class. The actual middle class is probably struggling. One reason is that most people know people about as rich or poor as themselves, so everyone thinks they are more normal than they are.
A simple new tool from Harvard University economist Maximilian Kasy can help correct any wrong notions you have about whether you are, indeed, the 1% or the 10% or the 50%. Choose your nation, enter your assets and debts into the Wealthometer, and you’ll see where on the wealth spectrum you fall. When I used the tool, my own guess was off by nine percentage points, and I probably do way more reading about income inequality metrics than most.
It’s important that people have a better understanding of where they fall on the wealth spectrum. If many think they are richer than they are, they’re likely to think that higher taxes on the wealthy will affect them more than it will. Using a number of underlying assumptions and calculations, the tool also allows people to model their own changes in tax policy and see whether they’ll be a winner or loser under the change. The hope is this can help forge a better public debate than typically is had today:
“In controversies concerning tax policy, and economic policy more generally, an oft-discussed topic is how various measures would affect ‘the economy,’” the site explains. “This is not a particularly sensible question to ask, as most measures entail winners and losers, and corresponding conflicts of interest. Economic research can help clarify who would win or lose, and by how much.”JL