Worried about inequality? Focus on the poor, not the rich

by Ryan Streeter on December 22, 2011. Follow Ryan on Twitter.

The year-end news on the public’s view about the economy is not good. This naturally drives the political class into fits trying to figure out how to respond to public unrest. Gallup’s latest assessment of the national mood shows that dissatisfaction with how things are going in America has only been worse once since 1979, and unsurprisingly, economic concerns drive the sour mood.¬†President Obama and others have tried to get out ahead of the national mood by focusing on inequality and middle class stagnation.

This is a bad idea. A¬†forthcoming paper by Georgetown’s Daniel Hopkins shows why. By using several decades of data on public perceptions together with data on inequality, Hopkins shows that public perception about the economy is driven more by how the poor fare over time than how the wealthy perform.

The first important finding in his paper is that perceptions of how the economy is going are pretty uniform in America whether you’re rich or poor. Low-income Americans don’t have a worse view than the wealthy, and vice versa.

The second important finding is that poor Americans aren’t resentful. They don’t assess their situation based on the fact that the rich are getting richer faster (though they are). They assess how they’re doing relative to their own performance over time.

And the third and most important finding – the conclusion of the paper, really – is that Americans judge the condition of the economy by how well the poor are faring more than how the rich are doing. In Hopkins’ words, “Americans at all income levels weigh income growth at the low end in their responses.”

What this means is that building a political strategy based on resentment toward the 1% will be largely ineffective. As we’ve already seen in recent polling, Americans don’t really buy this line. Hopkins’ paper helps us understand why.

It turns out that, over time, Americans are more interested in whether they can perceive upward mobility from the bottom. If they can’t, that makes them sour more on the economy than if they perceive the super-rich getting richer faster than everyone else.

It’s precisely this notion of upward mobility that most people throughout the political class talk about very little. And it turns out it may just be what their constituents care about more than anything else.