Views of the Poor: New vs. Old Money. NewsWire

NewsWire: 8/5/22

• Who’s more sympathetic to the poor: the “born rich” or the “became rich”? According to a new study, it’s the former. (The Wall Street Journal)
• NH: Ever since Horatio Alger published Ragged Dick in 1868, if not earlier, Americans have idolized the rags-to-riches hero. According to a new study, this much is indeed true: Americans really do admire the "self-made man."
• Yet this is where the study gets interesting. It turns out that among the qualities most Americans admire among self-made people is their greater compassion for the less fortunate. According to the study, however, most Americans are mistaken in assuming any such compassion. Self-made people are actually less likely to feel compassion for the poor than born-rich people.
• OK, so let's start with the first part of this study. The researchers asked a random sample of all Americans how they viewed those who are "born rich" versus those who "became rich." Across the board, the respondents said they regard self-made people more positively. They described the "became rich" as more trustworthy, moral, and deserving of their wealth than the "born rich."
• Among these admirable qualities, respondents agreed, was greater empathy for the poor. The researchers probed this empathy extensively. It's not just that most Americans think the "became rich" feel more deeply for the poor ("worry," "compassion," and so on) than the "born rich." They also think the "became rich" are more likely to believe that poverty is due to "external circumstances," that the poor are forced to make "personal sacrifices," and that poverty should be remedied by "wealth redistribution."
• Here are the survey numbers.

• Get the picture? Most Americans think that "became rich" tycoons have a gushy soft spot for the less fortunate--maybe because they were once less fortunate themselves. Compared to flinty "born rich" Scrooges, these folks almost come across like popular-front New Dealers. As the researchers put it, most Americans assume that the "became rich" would like to tell the poor, in effect: "Unlike other rich folks, I’ve been in your shoes and I understand your struggles."
• Now comes the second part of the study. The researchers conducted a second survey on how the rich actually view the poor. They interviewed Americans in the top quintile of households by income and divided them into two groups depending on their personal history: the "became rich" and the "born rich."
• Here's the result, which may or may not surprise you: Those "born rich" were significantly more sympathetic to the poor than those who "became rich." This was true across all five of the sympathy parameters shown in the chart.
• The study raises two obvious questions. The first has to do with the survey of the top quintile. Why, against most people's expectations, are the "born rich" more sympathetic than the "became rich"?
• The researchers themselves reveal a large part of the explanation in the answer to one of the further questions they ask all the rich respondents: How difficult is it, in general, for a poor person to become rich? They found that the "born rich" think it's more difficult and the "became rich" think it's less difficult. And in fact it's this difference in belief between the two groups that almost entirely explains the difference in sympathy.
• The "became rich," in short, are more likely to believe that people who work hard at getting ahead really can get ahead: Hey, I did it, so why can’t they? The "born rich" are more likely to believe it's not possible. Many may wonder if they themselves could have gotten rich if they weren't born that way. The "born rich" are therefore more likely to sympathize with the poor: It's not their fault.
• This finding reflects a familiar class dynamic we have seen throughout American history. Many of the Gilded Age robber barons indeed rose, like Horatio Alger heroes, from humble backgrounds. And while they often gave generous support to public works, most were adamantly opposed to any direct relief for the poor. By contrast, observed William Graham Sumner, it was the "born rich" coupon-cutters--the fourth-generation Brahmins, not the first-generation Andrew Carnegies--who were most supportive of generous, paternalistic government. Much later, during the Great Society 1960s, these latter types became known as "limousine liberals."
• Financial advisors find this same division today among their 30-something Millennial clients with substantial assets. If they made the money themselves, say by starting a business, their clients will tend to be fairly hardnosed about how it should be invested. But if they inherited it (or maybe won it in a lottery), they will be much more likely to feel guilty about their wealth, be strong supporters of ESG investing, and will probably donate large shares of their inheritance. (See “Early-Wave Millennials Still Wary of Investing” and “Well-Off Millennials Uneasy About Their Wealth.”)
• So what's the second question? It's this: Why do most non-rich people believe the "became rich" are most sympathetic to their plight?
• IMO, it's evidence of profoundly mixed feelings. On the one hand, we Americans love the "became rich" because they substantiate our fond hope that anyone can get to the top in this country. On the other hand, we don't like to reflect on what the "became rich"--who believe more than anybody else that it is possible to rise with hard work--must think about all of us who have not risen. They may, like Carnegie, gladly help us to rise by building schools and libraries. But pity us and help us to feel comfortable where we are? No, probably not.