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Misperceptions of Upward Mobility - 5/12/15

A recent New York Times article points out that economic inequality in the U.S. is at its highest level since the 1930's.  Yet, many Americans do not appear deeply concerned by this issue.  Why?  One theory is that Americans accept such inequality because they misperceive the actual level of economic mobility. 

Two independent research teams recently determined that Americans across the economic spectrum severely misjudge the amount of societal upward mobility. Interestingly, overestimating upward mobility supports satisfaction among rich and poor alike.  For those who consider themselves rich, perceptions of substantial economic mobility help to justify their wealth.  For the poor, exaggerated perceptions of social mobility create hope for a brighter economic future. 

A study led by Cornell psychologist Thomas Gilovich found that members of ethnic minority groups tend to overestimate upward mobility more than others.  Some conclude that addressing the rising economic gap between rich and poor will therefore not only require us to deal with policy, but also with biases in our collective psychology.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.