Why Do Americans Overestimate Social Class Mobility?
The American Dream is alive and well… in our imagination
One of the defining features of the American Dream is the idea that no matter where you come from if you work hard enough, you can climb the economic ladder and be successful in the United States of America. But in 2020, this is hardly the reality. In a July report by CNN Business, it was revealed that the income inequality gap has never been wider. The Coronavirus outbreak has further deepened this divide but it’s too soon to predict the long-term effects the pandemic will have on the economy.
Despite all of this, studies show that Americans consistently misjudge the amount of upward mobility in society. And while believing in the American dream might be a motivational factor for some, having too much faith in the system “downplays the inherent strain that economic inequality places on society, and specifically, on individuals at the bottom of the social class hierarchy.” So why do Americans consistently and severely overestimate social class mobility when compared to European nations?
In the graph above, we can see that when it comes to upward mobility, Americans are the ones who overestimate the most. They predicted that a child born into a household in the bottom 20% of earnings, has an 11.7% chance to reach the top 20% of earnings. When in reality, he/she only has a 7.8% chance to do so. It is also worth noting that America’s 7.8% is much lower compared to the other European countries.
Several researchers have been intrigued by this trend and have conducted experiments to understand it. A study conducted by Kraus and Tan was interested in how Americans perceived social class mobility (the ability to move up or down in education and income status). The researchers designed a variety of experiments, from which they also concluded that Americans have much more faith in the idea of social mobility than they should, based on real-world trends. The participants of the study specifically overestimated:
- How much working an extra 1000 hours would increase income standing
- How much a college education helped in improving social mobility
- How many students in top universities came from low-income families
As we can see above, the only underestimation was when participants were asked to estimate the number of students in top-universities that came from high-income households. Further proving our lack of awareness regarding economic equality. If we take the underestimated factor out of the equation, on average, the participants overestimated around 18.3% more than actual data suggests.
The researchers were also interested in what factors contributed to these findings and concluded that younger people are more likely to overestimate and conservatives are also more likely to overestimate when compared to liberals.
The most interesting group effect occurred on self-reported social status: the higher a participant’s social class, the more that participant tended to overestimate the prospect of social mobility. In other words, a wealthy American appears more likely to believe social status is the direct product of hard work and not an artifact of, say, birth or luck. Or, as Kraus and Tan put it, the finding may reflect a hope that “elevated positions in society are achieved fairly by individuals.
Bloomberg City Lab
The “Romanticization of the American Dream” seems to be an important factor in creating this disconnect. In order to grasp the grim reality of the economic system, we not only need to update ourselves on statistical trends but also be beware of any psychological biases that we might have. The researchers revealed that the overestimation was not only because the participants were unaware of actual estimations, but also because ‘people are motivated to satisfy the basic need to live within a society whose structure is fair and merit-based.’ This psychological factor worked for both high-income and low-income participants because the rich ones wanted to believe in a system that rewarded hard work (not family background) so they can feel good about their success. And the low-income participants wanted to believe in a just system because they hoped for a brighter economic future for themselves.
