More than you think

How much money do you need to live a contented life? How much money do you think the average American needs to live a contented life? How much money do low-income American families need?

When I say (or write?) contented life, I mean people would rate their well-being as at least eight out of ten.

The charts below show you what Americans guessed other people needed. As you can see in the top chart, Americans consistently underestimate how much money other Americans need. The bottom chart shows the same effect for beliefs about low-income households.

Indeed, 85% of Americans underestimated how much money the average American needs to live a contented life and 86% of Americans underestimated what a low-income family needs. Ironically, when asked about their own needs, Americans consistently gave higher numbers for their own income needs than what they thought others needed.

How much do you think others need to live a contented life?

Source: Lepinteur and Powdthavee (2025)

Such are the results of a survey of Americans by Anthony Lepinteur and Nattavudh Powdthavee. On average, Americans underestimated the needs of the average American by 12% and the needs of a low-income American by 14%.

This has significant policy consequences, because if you think other people need less money to live than they really do, you will complain about welfare queens and support less government redistribution than if you know how much people really need to live on.

The policy question then becomes whether one can adjust the beliefs of people to more correctly reflect the true needs of other people. The sad news from the study (which has significant limitations in this bit because it only uses a short, written intervention) is that ordinary people don’t change their opinions when they learn how much money other people need to live a contented life.

But under the surface, there is some hope. While the average person did not change their opinion, a significant minority did: those who felt the information given to them was trustworthy and personally relevant.

If you have had personal experiences of being poor or cash-strapped in the past and if you trust the source of the information, you are much more likely to adjust your views and turn in favour of more government redistribution.

I don’t want to go all social justice warrior here, but I very much sympathise with this view. When I had long periods of no income in the middle of my career and was significantly cash-strapped, my views about people struggling to make ends meet changed significantly. In my case, I became much more willing to pay more taxes and much less understanding of people who try too aggressively avoid taxes (or people who move to a tax haven or low tax jurisdiction to save on taxes).

On the other hand, this is why the decades of erosion of trust in politicians, the media and other sources of information are so poisonous for society. As Hannah Arendt observed in “The Origins of Totalitarianism”, the trick of dictators and totalitarian rulers is to undermine the belief of ordinary people in all sources of information. This is why dictators still hold rigged elections. Everybody knows the elections are rigged, but that is the point. Because these rigged elections allow dictators to tell their people that the other elections in other countries are rigged as well.

And this is why the trend towards segregation between different classes of people is so dangerous. When rich people no longer have to mix with poor people (except when they hire them as staff), when the children of rich people no longer go to the same schools as the children of poor people, mutual understanding goes out the window. Rich people no longer have any experience of what it means to live an ordinary life or what ordinary people need to live a content life. And that tilts their political views not only away from reducing inequality but towards efforts to get the most from the government for themselves in the form of lower taxes, etc.

Does that remind you of somewhere?