What do you believe is the single most important factor driving up the cost of living in Nigeria?

Barnabas Szaszi and colleagues conducted four studies to explore how well people understand the wealth held by others. In one study, 990 US residents recruited online were asked to estimate the minimum annual household income thresholds of various percentiles of American earners.

Participants underestimated the income thresholds of the top 1% of earners but were more accurate when estimating income thresholds for lower percentiles. These results were replicated in a survey of 834 US citizens who were incentivized to guess accurately with the promise of cash rewards for accurate answers.

The study was published in PNAS Nexus.

In two additional studies, participants were shown photos and income figures for members of a fictional society, which allowed the authors to manipulate the extent to which wealth was concentrated in the top 1%. Participants underestimated the average income of the top 20% but not the lower quintiles.

• Read More