Suppose that you lead a comfortable middle-class life. Let's say that you're in your 30s, married, two children, and you make $100,000 per year. I offer you a fair coin flip with the following possible outcomes:
- Heads: You will be stripped of most of your assets and will earn $30,000 per year for the rest of your life. That's all you get, and neither friends nor family can top it up for you.
- Tails: You will earn $1 million per year for the rest of your life.
Would you take me up on my offer to flip the coin?
So would you take him up on the coin flip?
Please consider before reading on.
Seriously. You in the back with the glazed over eyes, I can tell that you're not really considering it!
So seriously, would you take it?
As it turns out, the vast majority of respondents would decline to take the coin flip. Drum asked this question as a prelude to a piece about income inequality. The point of the question is to determine whether someone at the top of the middle class making $100K a year would feel closer to someone at the bottom of the working class making $30K or someone in a higher earning bracket making $1M.
So how to get at the difference? Well, I figured one possible way is this: if you really were a fairly ordinary upper middle class wage earner making $100K per year, and you had a 50-50 chance of either joining the ranks of the elite or falling down to the bottom of the working class, which seems further away to you? The answer from comments was loud and clear: the bottom of the working class. I didn't count, but I'd say only about 10% of commenters were willing to take the coin flip. The other 90% would stick with their $100K lifestyle.
Again, the study isn't meant to be scientific in any way. Nor is it portrayed as such in the piece. I think however that there are some points that should be made in opposition to his conclusion.
First of all, I will concede his point that someone making $100K and someone making $1M do share certain amenities that are not available to a person making $30K. Significantly, they share a certain degree of income security. A set back like temporarily losing a job or suffering a debilitating illness might only be an inconvenience (though certainly a serious one), for the upper brackets. In the case of the lower bracket, this sort of circumstance can prove utterly ruinous since there simply is not enough of a cushion to adequately prepare for it.
That said, the vast majority of people making $100K have a very, very good understanding of what the $30K lifestyle entails. For all intents and purposes, NOBODY is making six figures directly out of university. Just about everyone starts at a pretty low rung and climbs upwards or remains more or less at that level.
At the same time though, the fabulous life of a millionaire remains just that: fabulous. It's a lifestyle that sounds wonderfully attractive certainly. But I would venture that it's not a lifestyle that most of the respondents have real life experience leading.
In essence then, the question could be rephrased thusly:
Heads: You go back to that shit apartment you lived in when you were in your twenties.
Tails: You're transported to MAGICAL HAPPY LAND where every day, you feast on nothing but braised unicorn!
Given that respondents would have a pretty good idea of what a failed flip entailed and very little of what a positive one might mean, it's only logical that they would opt to decline.