Tag Archives: wealth gap

How Many Pieces of the Economic Pie Do You Get?

Among rich nations of the world, “The top 1 percent in the U.S. own a much larger share of the country’s wealth than the 1 percent elsewhere.”

Christopher Ingraham quoted that statistic in a Washington Post article. (“Wealth gap widens between rich, everyone else,” reprinted in The Seattle Times, 10 Dec 2017.)

To aid our understanding, Ingraham proposed an illustration: Represent all the citizens of the United States as 100 people, divvying up an economic pie that is cut into 100 equal pieces.

Most Americans do not want a society in which everyone receives exactly the same amount—each receiving one piece of the pie. Most want more rewards going to those who work harder, for example.

Ingraham quoted a survey to find out how people thought such a pie should be divided. The survey asked respondents to divide the population into five groups by descending order of income. Then they divided the 100-piece pie among the five groups according to what they thought was fair.

Results: The wealthiest 20 percent of society would get nearly one-third of the pie; the next group about a fifth of the pie; the third group also would receive about a fifth; the next group would get 13 percent of the pie; the bottom group would get 11 percent.

In other words, “. . . the most productive quintile of society would amass roughly three times the wealth of the least productive.”

In fact, Ingraham writes, the top 20 percent of Americans own 90 percent of the pie, not 33 percent, as suggested by survey respondents as ideal.

The next 20 percent divide eight slices among all their members.

The middle 20 percent split the last two pieces of the pie.

The next group gets no pie.

The last group owes pie—they are pie debtors.

Do our tax policies favor or discourage a fairer division of the pie?