Are You Rich? This Income-Rank Quiz Might Change How You See Yourself – The New York Times

[Click here to skip the exercise altogether and see the answer for a New York area household earning $150,000 a year.]

Answer these five questions to get a better sense of where your expectations meet reality.

Here’s the personal income distribution among earners in your area, and in your age group, with your bracket highlighted:

Income rank in the

area:

Percentile

Income

Source: American Community Survey (5-year estimates), in 2019 dollars. Figures are rounded.

The concept of “rich” is more complicated than this, of course. Every household is unique; housing costs and other living expenses can vary widely within metro areas; student debt and medical expenses can be crippling; children are expensive. And income isn’t the only variable that affects economic standing — savings, investment portfolios, real estate and other holdings not accounted for here all factor into a family’s overall wealth.

But these figures can provide perspective. They show the income distribution of people and households in your area to demonstrate where you stand relative to other residents. They also make clear the wide regional variations in American income — a high earner in Omaha would not necessarily be a high earner in San Francisco.

Many Americans near the top of the income ladder don’t like to think of themselves as rich, preferring words like “affluent” or “comfortable” or “lucky,” said Rachel Sherman, a sociology professor at the New School who wrote a book chronicling the attitudes and perceptions of affluent New Yorkers. “Rich” can carry connotations of greed, opulence or entitlement, which, not surprisingly, few want to be associated with.

“It’s hard to say, ‘I’m rich, but I’m the good kind of rich person,’ ” Ms. Sherman said.

You might not feel rich, but most earners like you in your age group in the _____ area make less than _____ per year; the one you entered is significantly higher.

How incomes like yours would rank in 100 large metro areas

An income of

per year would be …

If your income rank is higher than you thought, you’re not alone

Most of us prefer to call our incomes “average,” even when, statistically speaking, they’re not. But that assessment doesn’t really come from a deep understanding about our actual place on the income spectrum. For many people, it’s not even a quantitative question at all.

A 2018 YouGov study, for example, asked respondents what annual income would be required before a person could be considered rich. The higher a respondent’s income, the higher he or she set the bar.

“What people are doing is telling you how they feel about how much money they have,” said Keith Payne, a psychology professor at the University of North Carolina who has written about inequality and income perception. “Do they feel like they have as much money as they need? Or do they feel like they don’t have enough?”

Pct. of Americans who call their income “average” compared with their actual income rank

More than a third of respondents in the 90th percentile described their income as “average” compared with Americans in general

General Social Survey ; based on Americans’ answers to the question , “Compared with American families in general, would you say your family income is far below average, below average, average, above average, or far above average?” Actual income ranks are based on inflation-adjusted self-reported household incomes

Some of this perception may be rooted in the lopsided nature of income distribution in the United States, in which the very top earners have made extraordinary gains. In a country where the top 1 percent earns about one-fifth of the national income, it can seem as if “the rich” really means “the megarich.”

When most of us assess our financial well-being, we typically refer not to data tables but to comparisons with the world around us: our friends, our colleagues and our neighbors. Wonderful as they may be, they do not necessarily make up a representative sample of the income distributions in our cities, especially when we are increasingly living among people with incomes similar to ours.

If Americans were perfectly scientific about assessing their incomes, we might expect the chart above to have symmetry around the 50th percentile — the true middle of the income distribution. But respondents in the 60th and 70th percentiles were more likely to call their incomes “average” than those in the true middle. And people near the very bottom of the income distribution were nearly as likely to call their incomes “average” as those near the very top.

This phenomenon is not unique to the United States. In 2016, researchers in Sweden published the results of an experiment in which they asked a representative sample of Swedes to guess their place on the income distribution.

The researchers found that a “vast majority” of their respondents believed they were poorer, relative to others, than they actually were. The people who thought they were right in the middle of the income distribution – perfectly middle class, you might say — were, on average, closer to the 75th percentile. And as a group, respondents whose incomes actually resembled the true median thought they were closer to the bottom fourth.

Perceived and actual income rank, Sweden

The “vast majority” of respondents thought they were lower on the income ladder than they actually were.

Richer (and Holier) Than Thou? The Effect of Relative Income Improvements on Demand for Redistribution ,” by Mounir Karadja, Johanna Mollerstrom and David Seim

It’s true that the differences between perceived income rank and actual income rank represent much smaller dollar amounts in Sweden than they do in the United States. The difference between the 80th percentile and 50th percentile in the U.S. is about $60,000; in Sweden it’s closer to $15,000. But the overall trend is similar: Wealthier people thought they were doing worse than they were, relative to everyone else.

What happens when you know your income rank

Americans generally like the idea of taxing other people to provide benefits for people like themselves.

But not surprisingly, redistributive policies become less popular as more details about them become known — one reason some Democrats are worried that initial public support for proposals like “Medicare for all” and guaranteed free tuition to public two- and four-year colleges will eventually wane.

In the Swedish experiment, when survey respondents learned they were higher on the income spectrum than they thought they were, they became less generous in their attitudes toward policies that would distribute money away from people like them. That logic works in the other direction, too: Redistributive policies might be more popular if lower-earning households who perceive themselves as higher on the income ladder knew where they truly stood.

A real-world example occurred after the 2015 State of the Union address, in which President Obama proposed ending tax benefits for college savings accounts (most of the balances in such accounts were held by families making at least $200,000 a year). More than 90 percent of American married couples made less than that, but Mr. Obama abandoned the proposal within a week under political pressure from both parties.

Writing about the episode for The New York Times, Josh Barro offered this summary: “The first rule of modern tax policy is raise taxes only on the rich. The second rule is that your family isn’t rich, even if you make a lot of money.”