How rich do Americans think rich is?

Modeling how Americans actually experience wealth.

Americans don’t really understand wealth. In my last article we walked through two reasons for this suggested by economic research: we rely on very crude social signifiers to understand wealth, and our mind was not made to deal with numbers so huge. I also argued for a third possible explanation: Americans have a good idea of what kind of wealth you can earn from wages, but do not seem to have very good intutions about capital wealth. This is why, if you ask Americans about the net worth of the rich, they’ll provide extreme underestimates in the range of $87 million.

That figure may seem like a useful point of reference when we are trying to understand how Americans see inequality, but it probably doesn’t tell us all that much. The problem is that when people say $87 million, we can’t be certain what that figure actually means to them. A poor person might look at that kind of money and have in mind something like Scrooge McDuck diving into a vault of gold, while a rich person might think of $87 million as moderate wealth, enough to buy a second mansion but not a private island.

With that disconnect in mind I decided it might be useful to try to model how Americans experience wealth. This, after all, is where much of our understanding of wealth actually comes from: our exposure to rich people in our day-to-day lives.