The United States has long been seen as the "land of opportunity", where people who work hard get ahead. Belief in this fundamental feature of America's national identity has persisted, even though inequality has been gradually rising for decades. In recent years, however, the trend toward extremes of income and wealth has accelerated significantly, because of demographic shifts, the economy's skills bias, and fiscal policy. Is the collapse of the American dream at hand?

From 1997 to 2007, the share of income accruing to the top 1 percent of US households increased by 13.5 percent. This is equivalent to shifting $1.1 trillion of Americans' total annual income to these families - more than the total income of the bottom 40 percent of US households.

Inequality's precise impact on individual well-being remains controversial, partly because of the complex nature of the metrics needed to gauge it accurately. But, while objective indicators do not provide a complete picture of the relationship between income inequality and human well-being, how they are interpreted sends important signals to people within and across societies.