Management Newsfeed Update

In writing about ?Unhappy America,? the Economist made the following point about inequality and the rich:

?Many Americans feel as if they missed the boom. Between 2002 and 2006 the incomes of 99% rose by an average of 1% a year in real terms, while those of the top 1% rose by 11% a year; three-quarters of the economic gains during Mr. Bush?s presidency went to that top 1%. Economic envy, once seen as a European vice, is now rife. The rich appear in Barack Obama?s speeches not as entrepreneurial role models but as modern versions of the ‘malefactors of great wealth’ denounced by Teddy Roosevelt a century ago: this lot, rather than building trusts, avoid taxes and ship jobs to Mexico.”

It sounds plausible. The top 1% has seen much faster income growth than the rest of the economy — that top 1% controls, by some measures, the largest share of total income since 1929. And recent months have seen a sharp rise in media coverage of inequality, as the middle class struggles to fill their gas tanks and put food on the table and the rich are seen buying yachts and lining up for private jets.

But how do you measure wealth envy?

Unfortunately, there?s no ?Envy Index? to track over time. While surveys typically ask Americans how they?re doing economically, they rarely ask how they they feel they?re doing relative to other Americans.

The closest thing I?ve found to an envy index is a regular poll on “haves” and ?have-nots? that was brought to my attention by Jodi Allen of Pew Research at a Century Foundation panel last month. (I participated as well — see video clips here). In a fascinating presentation, Ms. Allen described a Gallup poll that showed that since 1988, the number of Americans who say the country is divided between ?haves? and ?have-nots? has increased dramatically.

The chart shows that the country is now evenly split between those who think the country is divided and those who don?t. That doesn?t sound too bad. Yet if you look at the trend — the critical point with polls — it shows a rapid decline in those who don?t believe in the divide, and a surge in those who do.

A growing number of Americans also feel left out: The number of respondents describing themselves as ?haves? fell to 50% from 59%. (That?s as of January 2008.) And the percentage of people describing themselves as ?have-nots? doubled, to 35% from 17%.

?What lies behind this heightened awareness of class divisions?? Ms. Allen asked. ?Well, maybe a lot of things — but surely a big factor is simply that in recent years with wages more or less stagnant, more and more people have felt under economic strain.?

Still, this only proves that Americans understand the reality of Richistan, or the increasingly separate country of the wealthy. It doesn?t mean they resent it.

The only Gallup question that relates to envy asks respondents if they ?feel the distribution of money and wealth in this country today is fair.? In April, 27% said it was fair (down from 31% in 2003), while 68% said it should be more evenly distributed (up from 63% in 2003).

So Americans know the country is divided between haves and have-nots and they think it?s unfair. But are they ?envious?? What do you think, Wealth Report readers?