American Dream? Or Mirage? - Note for a Lecture, "E Pluribus Unum? What Keeps the United States United"

MAY 1, 2015

MICHAEL W. KRAUS, SHAI DAVIDAI and A. DAVID NUSSBAUM
New York Times

ECONOMIC inequality in the United States is at its highest level since the
1930s, yet most Americans remain relatively unconcerned with the issue.
Why?

One theory is that Americans accept such inequality because they
overestimate the reality of the “American dream” — the idea that any
American, with enough resolve and determination, can climb the economic
ladder, regardless of where he starts in life. The American dream implies that
the greatest economic rewards rightly go to society’s most hard­working and
deserving members.

Recently, studies by two independent research teams (each led by an
author of this article) found that Americans across the economic spectrum did
indeed severely misjudge the amount of upward mobility in society. The data
also confirmed the psychological utility of this mistake: Overestimating
upward mobility was self­serving for rich and poor people alike. For those who
saw themselves as rich and successful, it helped justify their wealth. For the
poor, it provided hope for a brighter economic future.

In studies by one author of this article, Shai Davidai, and the Cornell
psychologist Thomas Gilovich, published earlier this year in Perspectives on
Psychological Science, more than 3,000 respondents viewed a graph of the five
income quintiles in American society and were asked to estimate the likelihood
that a randomly selected person born to the bottom quintile would move to
each of the other income quintiles in his lifetime. These estimates were
compared with actual mobility trends documented by the Pew Research
Center. Participants in the survey overshot the likelihood of rising from the
poorest quintile to one of the three top quintiles by nearly 15 percentage
points. (On average, only 30 percent of individuals make that kind of leap.)
Studies by another author of this article, the University of Illinois
psychologist Michael W. Kraus, and his colleague Jacinth J.X. Tan, to be
published in next month’s issue of the Journal of Experimental Social
Psychology, found a similar pattern: When asked to estimate how many
college students came from families in the bottom 20 percent of income,
respondents substantially misjudged, estimating that those from the lowest
income bracket attended college at a rate five times greater than the actual one
documented by the Current Population Survey.

One experiment by Professors Kraus and Tan demonstrated the selfserving
nature of these errant upward mobility estimates. As with the studies
above, participants were asked to estimate the ease of moving up the economic
ladder. This time, however, they were also asked to estimate upward mobility
for people who were similar to them “in terms of goals, abilities, talents and
motivations.” In this case, respondents were even more likely to overestimate
upward mobility. We believe unduly in our own capacity to move up the
economic ladder, and these beliefs increase our mobility overestimates more
generally.

For those lower in income or educational attainment, lower standing was
associated with greater overestimation of upward mobility. Those with the
most room to move up were more likely to think that such movement was
possible.

However, when people were asked to explicitly state how high up the
economic ladder they felt, after accounting for their actual economic standing,
the reverse pattern emerged: The higher up people said they were, the more
they overestimated the likelihood of upward mobility. Being aware of your
position at the top of a low­mobility hierarchy can be uncomfortable, because
without mobility, sitting at the top is the result of luck, rather than merit.

Some Americans were better than others when it came to judging
economic mobility. Across both sets of studies, political liberals were less likely
to overestimate upward mobility relative to conservatives — a finding
consistent with other research suggesting that conservatives see our society as
more merit­based than do liberals.

In addition, studies by Professor Gilovich and Mr. Davidai found that
members of ethnic minority groups tended to overestimate upward mobility
more than did European Americans. This result indicated that those with the
most to gain from believing in an upwardly mobile society tended to believe so
more strongly.

Taken together, these sets of studies suggest that belief in the American
dream is woefully misguided when compared with objective reality.
Addressing the rising economic gap between rich and poor in society, it seems,
will require us to contend not only with economic and political issues, but also
with biases of our psychology.

Michael W. Kraus is an assistant professor of psychology at the
University of Illinois. Shai Davidai is a Ph.D. candidate in
psychology at Cornell University. A. David Nussbaum is an
adjunct assistant professor of behavioral science at the Booth
School of Business at the University of Chicago.