Ezra Klein is surprised that a family income of $88,000 puts you in the top 20% of Americans. He thought it would take a larger income. This gets at an interesting question: what do people believe about the income distribution of the United States? And how do those beliefs accord with reality?
A colleague, Eric Lawrence, and I asked this question in a 2007 survey:
How much income do you think the average American household earns in a year? If you do not know, you can just give your best guess.
The median answer was $40,000. The actual median is $48,000. On average, people’s estimates are fairly accurate.
Actual income levels do affect median estimates:
This makes sense: people’s estimates in part reflect their personal circumstances and surrounding environment. But only in part. On the whole, I was impressed with how accurate estimates were.
This “analysis” is just a first cut. I’d love any questions and suggestions in the comments.