Rich or Poor? We are only HUMAN !

Disagreements about the optimal level of wealth inequality underlie policy debates ranging from taxation to welfare. We attempt to insert the desires of ‘‘regular’’ Indians into these debates, by asking a nationally representative online panel to estimate the current distribution of wealth in INDIA and to ‘‘build a better India’’ by constructing distributions with their ideal level of inequality.

What’s an acceptable level of income inequality in India? Is the current situation far too unfair, as many who lean to the political left maintain? Would ending tax breaks for people earning more than 500,000 a year constitute “class warfare,” as many on the political right contend? Complex questions, to be sure.

But some surprising insight into these issues comes from a remarkable recent study by Harvard Business Review. You might be surprised by the results, whatever be your political persuasion or net worth.

It states :-

First, respondents dramatically underestimated the current level of wealth inequality. Second, respondents constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution. Most important from a policy perspective, we observed a surprising level of consensus: All demographic groups—even those not usually associated with wealth redistribution such as Republicans and the wealthy—desired a more equal distribution of wealth than the status quo. The idea which inspired this has been stated in the first lines of this blog. 

In their survey of 5,500 Indians, by asking respondents which of three templates of wealth equality they thought would be best: one representing perfect equality, where the bottom one-fifth of the population owns one-fifth of all wealth, as does the top fifth and every other fifth; one representing the current Indian situation, where the top fifth controls 84% of all wealth, while the bottom fifth owns 0.1%; and one representing the distribution in India, where the top fifth owns 36% and the bottom fifth controls 11%.

Why a Bad Economy is Good for Marriages 

Though not always. Interestingly, men tended to report increased relationship satisfaction only when none of the blame for household financial woes was directed at them. Diamond theorizes that societal pressure on men to be breadwinners (even when their wives contribute significant portions of family income) is still such that any blame directed at them — shared or not with anyone (their spouse) or anything (the national economy) — leaves them feeling less satisfied about their relationship. Yet more evidence of the often cited fragile male ego. Now that is a good point to cherish with. The economic downturn is forcing many unhappy couples to reconsider the financial pitfalls associated with divorce.

It’s a fairly revealing set of results. Despite all the talk about a divided Indians and class warfare, there is a remarkable level of consensus about the ideal wealth distribution across the political spectrum and income levels. The preferred wealth distributions of different party voters were only trivially different—in the direction you would expect—as were the preferences of those making less than 500,000 and those making more than 1,000,000. For all the alleged discord in this country, there’s an amazing amount of real agreement on what “a better India” would look like.

To be sure, liberals and conservatives often have very different ideas about how that ideal distribution should be achieved. But much of the prattle about class warfare these days comes not from mainstream Indians, but rather from those folks who have the most to gain from pointing out differences even when they may not exist: politicians and the media who cover them. So, the question which rises is  "Is Your Mind Over Money?"