A study in New Zealand found that liberals living in affluent neighborhoods tend to overestimate the average income of their neighbors. On the other hand, conservatives residing in poorer neighborhoods were more likely to overestimate their neighbors’ average income compared to liberals in similar areas. The research was published in Social Psychological and Personality Science.
Wealth inequality has been increasing globally over the past few decades, with a growing concentration of wealth in the hands of the top 1% of the population. This trend is particularly pronounced in developed countries, where the gap between the rich and the poor has widened significantly. Factors such as globalization, technological advancements, and policy decisions favoring capital over labor have contributed to this disparity. The COVID-19 pandemic further exacerbated wealth inequality, as the wealthy saw their assets grow while many others faced economic hardships.
Despite these trends, studies indicate that people, in general, are not very accurate in estimating the wealth of their society. More specifically, wealthy individuals tend to overestimate how wealthy others are, while poorer people tend to underestimate it. The reasons for these inaccuracies remain unclear, but researchers suggest that limited information about others’ economic situations, exposure to media, and daily encounters with wealth (or lack thereof) may play a role.
Study author Kieren J. Lilly and her colleagues hypothesized that political ideology might also influence how individuals estimate the wealth of others. They conducted a study examining the relationship between people’s actual income and their estimates of the average household income in their neighborhoods.
They expected that people’s estimates of how wealthy their neighborhood is would generally align with the actual wealth of the area. However, they also predicted that liberals living in wealthy neighborhoods and conservatives living in poor neighborhoods would be less accurate in estimating their neighbors’ wealth.
Conservatives generally advocate for traditional values, limited government intervention, and a cautious approach to change, emphasizing the preservation of established institutions and social norms. Liberals, on the other hand, typically support progressive values, favoring social and economic reforms, greater government intervention to address inequality, and are more open to change and innovation in how society is organized.
The researchers analyzed data from the New Zealand Attitudes and Values Study (NZAVS), an ongoing annual nationwide longitudinal panel study of New Zealand adults. This analysis used data collected in 2016 (wave 8 of the study). The data included responses from 14,853 New Zealand residents who provided relevant information for this analysis. Of these participants, 62% were women, with an average age of 50 years. Additionally, 79% were employed, and 66% lived in urban areas.
The researchers examined participants’ household income, political orientation (measured by the question: “Please rate how politically liberal versus conservative you see yourself as being”), their estimates of the average household income in their immediate neighborhood (“… think about all the other households in your immediate neighborhood. Give your best estimate of the average income of those households.”), and the actual household income of participants’ neighborhoods (derived from official New Zealand census statistics).
The results showed that individuals with higher personal household incomes tended to live in wealthier neighborhoods. These individuals were also slightly more likely to identify as liberal. When examining participants’ estimates of the average income in their neighborhoods, the results revealed that conservatives generally tended to overestimate the wealth of their neighborhoods. Overall, participants, regardless of political orientation, tended to overestimate their neighborhoods’ wealth.
However, the link between political ideology and estimations of neighborhood wealth appeared to depend on the neighborhood’s actual wealth. Liberals living in the wealthiest 5% of neighborhoods were less accurate than conservatives living in the same areas in estimating the average income of their neighbors. They overestimated their neighbors’ wealth more than liberals did, although both groups overestimated it on average. Conversely, conservatives living in the poorest 5% of neighborhoods were less accurate than liberals in similar areas, overestimating their neighbors’ wealth more than liberals did.
“Conservatives and liberals misperceive the average wealth of their own neighborhoods at opposite ends of the income distribution. Specifically, overestimates of the average household income of one’s neighborhood were more pronounced among (a) liberals living in the wealthiest neighborhoods and (b) conservatives living in the poorest neighborhoods,” the study authors concluded.
The study provides valuable insights into the relationship between political ideology and wealth perception. However, it is important to note that the observed association between political ideology and wealth estimates is very slight, detectable only due to the large number of participants in the study. Moreover, this association was only observable at the extreme ends of the wealth spectrum. For most practical purposes, the strength of this association is negligible, although it does illustrate that conservatives perceive somewhat less, and liberals somewhat more, income inequality in their societies.
The paper, “Opposing Misperceptions of Wealth: Liberals Overestimate Their Neighborhoods’ Wealth in Wealthier Neighborhoods While Conservatives Overestimate Their Neighborhoods’ Wealth in Poor Neighborhoods,” was authored by Kieren J. Lilly, Rael Dawtry, Robbie M. Sutton, Chris G. Sibley, and Danny Osborne.