In 2019 a British man in the audience of the BBC show Question Time, criticised the UK Labour party’s plans to tax the top 5% of incomes – insisting that he would be hit by this tax despite being "nowhere near even the top 50%" of earners. In his mind rich people “don’t even work”, and therefore deserved the tax, whereas his income “I'm not even in the top 50%”. As it turned out, he was earning £80,000: firmly in the top 5% of incomes according to the Office for National Statistics, which pegs the threshold at £75,300 per year. How could he be so misguided as to his socio-economic status?
Studies show it’s not absolute income that drives us, but relative income to our peers. You can feel poor in the top 5% if your mimetic rivals are in the top 1%. The incredulous man on Question Time thought he couldn’t possibly be in the top 5% of incomes, because most of of the people he knew were Lawyers or Doctors, earning more than him. You can quote statistics all you want, but as people we believe only what we see with our own eyes. He was under the illusion that rich people don’t work, and yet the majority of wealth today is earned: 68% were self-made, 24% had a combination of self-created wealth and inherited, and only 8% entirely inherited their riches.
The friendship paradox worsens the effect. Most people’s friends have more friends than they do, because the most popular people are friends with everyone. Because being rich and successful makes people popular, they’re likely to be in a lot more friend groups than those who are relatively poorer and less successful. The end result being that your friends are likely to be on average richer than you are, and that skews your estimations about how much you earn relatively to the rest of the world. Making matters even worse is availability bias: we tend to believe that things we see more often reflect reality more than they actually do. So when someone rich is always posting on social media about holidays, parties, shopping, etc, it leads us to believe everyone (except us) is living a similar lifestyle. When you do comparisons across nations, the results get more surprising. For example in the U.S. to be in the top 5% you have to earn much more: $342,987 per year, about £284k – to crack the top 5. Most people in the UK see the US as roughly equally wealthy, but in fact if the UK joined the US it would be the second poorest state, just ahead of Mississippi. When citizens of the UK observe American popular culture, on average they’re watching reflections of a society that is considerably more wealthy than they are. Extrapolate this effect out to the rest of the world: the average salary is $18,000 at purchasing power parity, and imagine how many people are feeling down from comparing themselves to impossible standards.
Social hierarchy has real world consequences. Negative social judgment causes a spike in stress 3x higher than non-social stressful situation, and receiving a compliment activates the same regions of the brain as enjoying chocolate. Studies also show we feel shame when being accused of something, even when we are not guilty of anything. Whether social sleights are real or imagined, being in an imbalanced group can lead to resentment, and low self-worth, which manifest itself in ugly behavior, like our man on Question Time. This phenomenon is not constrained to him: research done by YouGov found that people on relatively good incomes did not consider themselves “rich”, and that the nearer they were to a good salary themselves the less likely they were to feel well off. While 74% of people earning between £20,000 and £29,999 (the median UK salary is £25,000) said they would consider someone on £60,500 a year to be rich, only 27% of those earning more than £50,000 a year thought the same.
This effect explains why children of wealthy parents aren’t happy. If you were destined to inherit millions just by being born, the rest of the people you grew up with were also likely ‘baby millionaires’: worth seven-figures purely from being born into the right family. If you grow up with money, you have all the advantages in the world, except one crucial one: the luxury of friends of lower socio-economic status around to keep you grounded. If you’re never subjected to hardship, you’re missing out on all the memes that make people normal. The same goes for your friends, who also grew up rich, and therefore you exist in a filter bubble far from reality. They say “behind every great fortune there is a crime”, but even if your parents didn’t earn their fortune, in today’s society many believe that being rich itself is a crime, whether or not you or your parents earned that money legitimately. As Presidential candidate Bernie Sanders espoused: “there should be no billionaires”. Growing up with privilege automatically puts you in the cross-hairs.
So instead you push in the opposite direction. You develop luxury beliefs: ideals that position yourself as edgy and morally forward thinking, but that would be extremely costly for anyone less advantaged. Beliefs that make you feel inclusive, but that ironically you can only adopt because you can afford to. Recent examples amongst the rich include championing polyamory, casual drug use, or neo-communism. For more examples look up the meme “what’s classy when you’re rich, but trashy when you’re poor?”. It’s not a coincidence that these are the very same ideals that are ultimately frowned upon when adopted by the working class. Rich people want the positive connotations of adopting woke ideologies, but not the actual associations with real people: their audience is still other rich people. When these ‘mind viruses’ get copied by the lower classes, because they have become aspirational, they’re summarily abandoned as the rich move on to something more tasteful. Meanwhile the poor are devastated by the consequences of their actions: polyamory leads to single-parent homes, casual drug use leads to prison, and neo-communism harms employment prospects.
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