The Lazy Poor or the Entitled Rich?

A psychological perspective on wealth, merit, and compassion.

Posted Mar 03, 2020 | Reviewed by Abigail Fagan

Matt Lamers/Unsplash
Recent political events have many asking: "Is it moral to be a billionaire?"
Source: Matt Lamers/Unsplash

With billionaire Democratic candidate Mike Bloomberg recently qualifying to participate in the Democratic presidential primary debate, many people have had questions about wealth. After hearing criticism against Bloomberg on the debate stage, my friends on one side of the political aisle asked, Is it moral to be a billionaire? Friends on the other side of the aisle asked, Is it okay for people to be rich in America? Is it okay to work hard and make money and excel?

Republicans and Democrats explain wealth in different ways. In a survey by Pew Research Center, participants were asked why a person is rich. The majority of Republicans said a person is rich because they worked harder, whereas most Democrats said that it was because they had advantages in life. On why a person is poor, most Republicans attributed it to a lack of effort, whereas the overwhelming majority of Democrats said it was because of circumstances beyond control. Which is it?

I grew up believing in the American dream. I assumed that hard work meant wealth, and having wealth meant you worked hard. Money earned was money deserved, making poverty something you could escape with enough effort. As I’ve gotten older, my understanding has become more nuanced.

Recent findings show that only half of today’s 30-year-olds earn more than their parents. However, 90 percent of children born in 1940 earned more than their parents. Rather than the ‘rags to riches’ fairytale so many of us want to believe in, opportunities vary widely depending on the occupations of one's parents. Researcher Michael Hout found that social mobility is far from the norm. 

Some may argue that the current generation experiences lower ambition and greater entitlement compared to generations past. However, the data indicates that millennials earn 20 percent less than baby boomers did at the same stage of life, despite achieving higher levels of education. While business leaders work hard, it’s difficult to defend the jump in the ratio of pay between a company’s CEO and their average worker at 30:1 in 1978, skyrocketing to 299:1 in 2014.

Tim Gouw/Unsplash
Millennials earn 20 percent less than baby boomers did at the same stage of life, despite achieving higher levels of education.
Source: Tim Gouw/Unsplash

Pensions are becoming a thing of the past, companies are relying more on part-time and contract work, and legislative barriers have made it more difficult for workers to unionize. Costs of housing and tuition have risen at a much faster pace than early-career salaries and the minimum wage. Rather than possessing inherent character flaws, the current generation faces a different economic reality than past generations; their money simply doesn’t go as far.

With ideals of meritocracy reinforced in American culture, it is tempting to assume that those who are wealthy have worked hard and fairly earned their affluence. But that wouldn’t tell the whole story. One study from 2017 found that 60 percent of wealth is inherited rather than worked for. There are also stories of executives exploiting workers, such as Jeff Bezos, who recently purchased the most expensive home in California and whose workers reported peeing in plastic bottles because they could not use the bathroom during their shift.  

Some advantages of the successful are less visible. For example, I worked hard to receive academic scholarships and ultimately earned a Ph.D. in social psychology with no debt. However, it would be unfair for me to not also acknowledge my own privilege at play in my accomplishments. My parents never handed me a wad of cash, but they did raise me with clean water and sanitary living conditions, adequate nutrition, a stable environment, a strong support system, quality healthcare, and a lack of childhood trauma.

Evidence suggests that simply having wealth, whether earned or by luck, increases one’s justification for it. Also known as the Just-World Fallacy, those who are on top of the social ladder, that is, those with money, power, and influence, believe the world is just. Those in the middle think the world is somewhat just, and those at the bottom believe the world is unjust. 

Researcher Paul Piff cleverly demonstrated this by giving some participants a clear advantage in a game of Monopoly such as giving them extra money. When he asked participants why they (inevitably) won, they described how they had made smart decisions, and downplayed their privileged position.

Those who believe the world is just, that is, believe you get what you work for, are more likely to justify inequality and victim-blame. If those who are wealthy are automatically seen as good, it is assumed that the poor must have done something to deserve their misfortune. This was addressed by political author Sarah Kendzior, who said:

"When wealth is passed off as merit, bad luck is seen as bad character. This is how ideologues justify punishing the sick and the poor. But poverty is neither a crime nor a character flaw. Stigmatize those who let people die, not those who struggle to live."

Blaming the poor for their circumstances disregards the potential physical, psychological, and neurological effects of poverty. Poverty has the largest association with people’s later well-being if they were in poverty between 0 and 2 years of age, a time before children can even make decisions for themselves. Brain scans from children in low- and high-income families show striking differences in areas involved in memory, language processing, decision-making, and self-control.

Evidence suggests that simply having wealth, whether earned or by luck, increases one’s justification for it.
Source: Freestocks/Unsplash

The effects of chronic stress are toxic. It may depress cognitive function: One study looking at sugarcane farmers in India found cognitive performance depended on whether they were tested before or after harvest. These individuals relied on the annual harvest for at least 60 percent of their income and sugarcane harvests occur only once a year. 

Understanding that wealth is no indication of one’s capacity for compassion or moral character can have important implications for public policy. For example, some participants of a Swedish survey were informed that half of all wealth is inherited, those with the highest incomes inherit the most, and that most Swedish billionaires inherited their fortunes. Those given this information were more likely to support an estate tax compared with those who were not. When wealth is no longer equated with worthiness, research indicating the greater political influence the wealthy have compared to ordinary citizens becomes even more disturbing.  

When discussing policies such as increasing taxes on the wealthy, it’s relevant to remember that money has diminishing returns when it comes to happiness. That is, the more money you have, the happier you are, but only until your basic needs are met. For example, a new car makes a millionaire happy, but it raises the level of happiness for someone with no car substantially more.

While the American Dream feels out of reach for many, it doesn’t have to. Rather than blaming the poor for their circumstances, we can use data-driven policies to address the needs of the nation. I echo the words of Elizabeth Gilbert, a philanthropist and member of The Compassion Collective, who wrote, “Those of us who are warm and dry and safe and well-fed must show up for those who are cold and wet and endangered and hungry. That’s a rule of life.”