The Psychology Of Settling For Economic Inequality

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By Lena Blake


| The current economic system operating America is failing, conditions of continual growth are unsustainable and short-sighted to the effects of ecological destruction and social injustice. The time has come for action toward a new resilient economic system that does not rest on persistent exploitation of the bottom of society’s hierarchy and our world of finite resources.

The U.S. faces inequalities by way of steady unemployment, appalling poverty rates, rising homelessness, mass incarceration, and that’s just the tip of the iceberg. The United States is the industrialized nation with the greatest level of inequality due to poor politics and policies that disproportionately favor the wealthy. Returning to business as usual is not a good option, and continues a path of increasing inequality. A peek into our psychology may help explain the phenomena of rising economic inequality without stronger objection in American society.

Michael Kraus, Assistant Professor of Psychology at the University of Illinois, wrote an article probing the question: Why is there not more resistance to the issue that the U.S. is one of the most unequal and rigidly stratified societies of the industrialized world?

Kraus states that the American Dream has infiltrated our politics, media, and ideology, purporting that hard work will earn you a fair share of the economic cake. The faith in economic mobility upward clashes with the reality of increasing economic inequality that funnels the majority of profits upward to the already-wealthy. These opposing beliefs held simultaneously will create cognitive dissonance: a state in which two belief systems come into conflict with one another. Dissonance is psychologically difficult and is therefore avoided for psychological consistency. However, some beliefs (i.e. the American Dream) are entrenched to the point that despite being presented with evidence of the contrary (i.e. economic inequalities), individuals often rectify the contradiction by favoring the former.

“Americans tend to downplay or justify widening inequality in order to sustain their belief in the possibility of a brighter tomorrow,” Kraus summarizes.

We see evidence of cognitive dissonance at work in Americans’ dramatic underestimation of the existing levels of wealth inequality.  The current distribution places about 50% of total income earned by Americans in the hands of just 10% of the population, yet the vast majority of society imagines the distribution more fairly.

Kraus and Dacher Keltner of UC Berkeley found that reasoning and rationalization for economic inequality is quite different depending on your location on the social hierarchy. Kraus and Keltner’s findings show:

Those who self-identified as belonging to the top of society’s hierarchy tended to believe:

  1. Economic inequality is a natural result of individual differences in hard work, talent, and skill.
  2. The world is fair and society’s structure is based on merit.
  3. Social hierarchy is an inherent and biological feature for individuals.

In contrast, those who self-identified as lower in the hierarchy tended to think:

  1. Economic inequality is caused more by external forces like markets, political influence, and educational opportunities.
  2. The world is less fair and society’s structure is less based on merit.
  3. Social hierarchy is more malleable and eternally determined.

These findings suggest a strong tendency for the wealthiest members of society to justify the rising economic inequality as natural and biological products of the wealthy. Our basic psychology points us to cling to the status quo while rationalizing the economic inequality to avoid cognitive dissonance. Read more about The Imagined Reality of the 1%. 

Kraus’ and Keltner’s findings are supported by research by psychologists Krishna Savani of Columbia Business School and Aneeta Rattan of Stanford University. Savani and Rattan expanded on a study of the perception of choice:

“The concept of choice makes people less disturbed by facts about existing wealth inequality in the United States, more likely to underestimate the role of societal factors in individuals’ successes, less likely to support the redistribution of educational resources, and less likely to support raising taxes on the rich—even if doing so would help resolve a budget deficit crisis.

Thinking in terms of choice, we argue, activates the belief that life outcomes stem from personal agency, not societal factors, and thereby leads people to justify wealth inequality.”

Considering these findings, the concept of choice leads us to think that some are wealthy while others are impoverished, due to personal choices and not external factors. The scholars conclude that this reasoning is contributing to perpetuating income inequality.

Research abounds that when economic inequality deepens, so do social ills. To move forward productively from here, Kraus explains, “we, and those in power in particular, cling to the status quo and, in the service of avoiding cognitive discomfort, overlook or rationalise economic inequality even as it causes some of the most significant social problems in our society. If they are to be successful movements for social change must confront not only the complex political and economic conditions that create economic inequality, but also the powerful forces of legitimation that exist within our own minds.”

This ideology of settling for widening economic inequality and insecurity is dangerous for the majority of Americans. In a 2014 segment, John Oliver turns his scope onto the politics and psychology of America’s staggering wealth gap. With a bit of humor, he looks at American inaction towards wealth inequality:

“America now has a system where wealth is essentially dispersed as a lottery of birth,” he says. “And maybe the reason we seem to accept that is that even though we know the odds are stacked against us, we all think we’re going to win the lottery.”

Find the full clip below:

John Oliver – Wealth Inequality

Photo Credit: Flikr

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