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UNITED STATES

The ‘American dream’ is actually Swedish: study

While US voters shunned the Democratic Party's traditionally redistributive policies in Tuesday's mid-term elections, most Americans actually prefer a wealth distribution model similar to Sweden's, writes the AFP's Andrew Beatty.

The 'American dream' is actually Swedish: study

Forget the socialist-bashing rhetoric and reverence for the filthy rich, when it comes to wealth distribution, Americans — even Republicans — would really rather live somewhere like Sweden.

According to a soon-to-be published study by researchers at Harvard and Duke universities, Americans believe US society is much more equal than it really is, and want it to be even fairer.

Business school professors Michael Norton and Dan Ariely asked 5,522 Americans about US wealth distribution and how it should look if things could be changed.

“Respondents vastly underestimated the actual level of wealth inequality in the United States, believing that the wealthiest quintile (20 percent) held about 59 percent of the wealth when the actual number is closer to 84 percent.”

Studies show current US wealth inequality is near record highs, with the top one percent of Americans estimated to hold around 50 percent of the nation’s wealth.

According to Norton and Ariely this tops “even the levels seen just before the Great Depression in the 1920s.”

But when asked how they would like the United States to look, respondents picked “wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution.”

In a blind test, about 92 percent of respondents said they preferred a model closer to Sweden’s wealth distribution to that seen in the United States.

The study’s authors also reported a “surprising level of consensus” among different groups, with 92 percent of Republican voters backing the Swedish model versus 93.5 percent of Democratic voters, with the richest and poorest also voting along similar lines.

“All demographic groups — even those not usually associated with wealth redistribution such as Republicans and the wealthy — desired a more equal distribution of wealth than the status quo.”

On average the top 20 percent of earners were seen as holding just 32 percent of wealth, less than the 84 percent in reality.

But anyone hoping this augurs well for a revolution will be disappointed.

Even if Americans become more aware of the wealth gap that exists, Norton and Ariely suggest they may misplaced faith in the “American Dream” to correct it.

“Just as people have erroneous beliefs about the actual level of wealth inequality, they may also hold overly optimistic beliefs about opportunities for social mobility in the United States — beliefs which in turn may drive support for unequal distributions of wealth.”

Disagreements about the causes of inequality may also drown out the consensus.

The authors also suggest there is a gap between what people would like to see and the policies they are willing to support to get there.

The study is to be published in the journal “Perspectives on Psychological Science”.

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BANKING

Card over cash? Why Germany is seeing a new payment preference

Cash has long been king in Germany, with many smaller retailers refusing to join the rest of the world in adopting contactless payment systems. But card-based payments are on the rise, as recent stats about Girocard use reveal.

Card over cash? Why Germany is seeing a new payment preference

Germany has long been a very cash-based country, occasionally to the dismay of frustrated tourists at the Döner shop.

A few German phrases express the people’s love of physical money. There’s ‘only cash is true’ – Nur Bares ist Wahres. Or Bargeld lacht, literally meaning cash laughs, but used to imply that cash is what’s wanted, similar to ‘cash is king’ in English.

But the classic German preference for cash appears to be evolving, as the use of girocards is growing, even for small transactions.

How are girocards being used?

Girocard, an ATM and debit card service offered by German Banks, was designed to allow customers to use virtually all German ATMs and, increasingly, to make purchases at businesses.

READ ALSO: Ask an expert – Why is cash still so popular in Germany, and is it changing?

Last year, consumers in Germany used their Girocard more often than ever before for cashless payments. A total of €7.48 billion payment transactions with the plastic card were counted – 11.5 percent more than in the previous record year 2022, according to figures published by the Frankfurt-based institution Euro Card Systems.

Whether at the bakery, petrol station or supermarket, customers are increasingly pulling out their cards at the checkout, even for smaller amounts. As a result, the average amount paid with the Girocard fell from €42.34 to €40.69 within a year. 

The rise of card payments in Germany

Contactless payment, which is possible with girocards and credit cards that have an NFC chip, got a boost during the Covid pandemic, as retailers promoted it for hygiene reasons. 

But the use of card payments has continued to grow in Germany since then, boosted partly by the increasing use of girocards.

Promoting the use of girocards, some German banks have expanded their cards’ functions: Sparkassen, Volksbanken, or Raiffeisenbanken offer girocards for the digital wallet, for example.

Banks want to continue upgrading the payment card with further applications. For example, a project is being tested which would add an age verification function to girocards that would be useful when a customer is buying cigarettes.

On the retail side, it’s clear why the Girocard is preferred to other debit options.

“We see that debit cards from international providers cost up to four times more,” Ulrich Binnebößel, Head of the Payment Systems & Logistics Department at the German Retail Association (HDE) told DPA.

What’s the difference between the Girocard and other debit?

The Girocard is a strictly German phenomenon. It can be seen as the latest iteration of the EC card, which was created to consolidate payment systems following the unification of former East and West Germany.

In 1991 different debit card systems, including Eurocheque guarantee cards from former West Germany and Geldkarte ATMs from former East Germany, were unified into Eurocheque cards.

Then in 2001, the Eurocheque system was disbanded, but German banks continued to use the EC logo for “electronic cash’” cards, or EC cards. In 2007, the German Banking Industry Committee introduced Girocard as a common name for electronic cash and the German ATM network.

Girocards are only issued and accepted in Germany, so if you want to get one of your own, you’ll have to join a German bank, and shell out those notorious German banking fees.

READ ALSO: Why it’s almost impossible to find a free bank account in Germany

Alternatively, you can get by with internationally accepted debit cards provided by a bank in your home country, or otherwise by joining an app-based European banking service like N26. 

But be warned, without the Girocard in hand, at some smaller retailers you may be told, “Leider nur Bargeld oder EC-Karte.

With reporting by DPA

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