More Than 1 in 4 Black and Latino Families Were Underwater Before the Pandemic Hit
Most Americans get that our nation’s wealth distribution skews toward the rich, yet few seem to fully grasp how gaping the disparities are
Ten years ago, social scientists Michael Norton and Dan Ariely published a paper in which they asked more than 5,500 American participants to estimate their nation’s wealth distribution. Their subjects guessed, on average, that the least wealthy 40 percent—about 125 million people—owned 9 percent of the nation’s overall assets. The true figure then was 0.03 percent—almost nothing. Sometime last year, I conducted an informal Twitter poll asking the same question, and though it was hardly scientific, most of my 32 respondents also greatly overestimated the wealth of the bottom 40 percent.
How could the bottom 40 percent have nothing at all? Well, as you move down the economic ladder, you reach a point at which household wealth zeroes out and turns negative. In 2019, according to the latest calculations provided to me by University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman, all households from the bottom up to the 23rd percentile owned nothing—or less than nothing. They were in debt, those at the very bottom deeply so. [Read more.]