“An imbalance between rich and poor is the oldest and most fatal ailment of all republics.” 

–Plutarch

A study published in the Journal of Experimental Psychology proposed that wealthy individuals are perceived to be significantly more competent than their non-wealthy counterparts and this judgement is based on the underlying assumption that wealthy individuals “earn” their wealth. In turn, people display more willingness to hire wealthy individuals, due to their higher perceived competence.  

This research was carried out by eight researchers, led by Amar Sarkar, a scientist at the University of Cambridge. 

Economic inequality is swiftly rising in the U.S. While millions of Americans lost their job and fell into poverty during the pandemic, the collective net worth of billionaires grew 1.1 trillion dollars in the past year. In fact, three billionaires (Jeff Bezos, Bill Gates and Warren Buffet) own as much wealth as the bottom half of the American population. 

Once known as the “land of opportunity”, it’s now clear that low-income Americans are heavily subjected to diminished economic mobility, making it difficult to increase their wealth and quality of life. To make matters worse, there is a common belief that the financial hardships of poorer individuals are due to a lack of hard work and ambition. This harmful stereotype often helps maintain the existence of inequality. 

To shed light on this phenomenon, a team of researchers designed a series of experiments to explore how strongly wealth can shape perceptions of one’s competence as well as how this may affect the opportunities they’re given. To obtain cross-cultural validity, the experiments were performed in the U.S. and India.

Experiment A

The researchers began by recruiting 426 participants from India and dividing them into a high wealth, low wealth or neutral-wealth condition. Participants in all three conditions were given nearly identical information about a target named Arjun, including his age, marital status, and educational background. 

The only difference was, in the low wealth condition, participants were told that the target had a bank balance of 5 thousand rupees (approx. $69 USD) while in the high wealth condition, his bank balance was 50 million rupees (approx. $690,000 USD). In the neutral-wealth condition, participants weren’t given any information about the target’s wealth. To assess competence, participants responded to statements such as “On a scale of 1 to 10, how efficient is Arjun?”

The results revealed that the high wealth target received the highest competence rating, followed by the neutral wealth target (whose bank balance was unknown). The low wealth target received the lowest competence rating from participants. 

Experiment B

Following these results, the researchers were curious whether simply knowing how competent an individual was could affect how wealthy others perceived them to be. For this experiment, the researchers recruited 1,547 participants from the U.S. Each participant read about a target named Mark and were told that he was low, medium or high in competence. Next, participants were asked, “in your opinion, what is Mark’s annual income?” 

As expected, the target was perceived to be the wealthiest when he was high in competence (average guess: $100,062), followed by medium in competence (average guess: $36,536) and then low in competence (average guess: $20,126). 

Experiment C

For their next experiment, the researchers explored whether knowing the source of one’s income could affect how competent they were perceived to be. 831 U.S. participants were presented with information about a target named William whose net worth was either $1,000 (low wealth), $50 million (high wealth) or no wealth information was given (neutral wealth). 

In addition, participants were informed how the target obtained his wealth: (a) entrepreneurial success by starting a business, (b) corruption by defrauding investors (c) inheritance from his parents, (d) winning the lottery or (e) no information was given. Afterwards, participants rated the target’s competence. 

The researchers found that the target was perceived to be the most competent when he obtained his wealth through entrepreneurial success. Competence impressions were second highest for the target when his source of income wasn’t reported, followed by when his wealth derived from corporate fraud. Lastly, when the target obtained his wealth through inheritance or lottery, he was seen as the least competent. There was no significant difference between these two variables, likely because being born to wealthy parents and winning the lottery are both due to random chance. 

Experiment D

To explore the real-world applications of their findings, the researchers designed one last experiment. 734 U.S. participants were asked to imagine they were part of a software company that needed to hire a software designer. Then, they were presented with information on a 36-year-old target whose net worth was in the 23rdpercentile ($2,500) or the 96th percentile ($1 million). Participants were asked to rate their willingness to hire the target on a scale from 1 to 10.

In line with expectation, participants who read that the target was high in wealth expressed greater willingness to hire him, compared to participants who read he was low in wealth. The researchers also found that this relationship was mediated by perceived competence. Specifically, higher wealth → higher perceived competence → more job opportunities. 

Recap

Altogether, these experiments provided significant evidence that knowledge of one’s wealth can affect how others see them. Generally, people high in wealth are automatically perceived as more competent than people low in wealth, even if their background information is identical in all other regards. This relationship also works in the opposite direction, such that, people high in competence are assumed to be high in wealth. In other words, “if he is wealthy, then he is competent and if he is competent, he must be wealthy”. 

However, source of income also plays a role in these results. Wealth derived from entrepreneurial success is associated with the highest competence rating, followed by unknown sources and corporate fraud, with inheritance/lottery resulting in the lowest competence rating. This suggests that the “rich and competent” stereotype only holds true if the person “earned” their wealth. 

Lastly, the researchers found that since wealth can affect how competent a person seems, wealth can indirectly impact their prospects, such as employment opportunities. During this time of rising economic inequality, the researchers hope that their work brings awareness to the widespread bias harming disadvantaged people from low-income backgrounds.