Loading the player...

What is the 'American Dream'

The American Dream is the belief that anyone, regardless of where they were born or what class they were born into, can attain their own version of success in a society where upward mobility is possible for everyone. The American Dream is achieved through sacrifice, risk-taking and hard work, not by chance. 

BREAKING DOWN 'American Dream'

The term was coined by writer and historian James Truslow Adams in his best-selling 1931 book "Epic of America."  He described it as ""that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement." He went on to explain, "It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position."

The idea of the American Dream has much deeper roots. Its tenets can be found in the Declaration of Independence, which states: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” In a society based on these principles, an individual can live life to its fullest as he or she defines it. America also grew mostly as a nation of immigrants who created a nation where becoming an American – and passing that citizenship to your children – didn't require being the child of an American. 

Achieving the American Dream requires political and economic freedom, as well as rules of law and private property rights. Without them, individuals cannot make the choices that will permit them to attain success, nor can they have confidence that their achievements will not be taken away from them through arbitrary force. The American Dream promises freedom and equality. It offers the freedom to make both the large and small decisions that affect one’s life; the freedom to aspire to bigger and better things and the possibility of achieving them; the freedom to accumulate wealth; the opportunity to lead a dignified life; and the freedom to live in accordance with one’s values, even if those values are not widely held or accepted.

The American Dream also offers the promise that the circumstances of someone's birth – including whether they were born as American citizens or immigrants – do not completely determine their future. The books of post Civil War writer Horatio Alger, in which ragged teenage boys rise to success through pluck, determination and good fortune came to personify realizing the Dream.

Today, home ownership is frequently cited as an example of attaining the American Dream. It is a symbol of financial success and independence, and it means having the ability to control one’s own dwelling place instead of being subject to the whims of a landlord. Owning one’s own business and being one’s own boss also represent American dream fulfillment. In addition, access to education and healthcare have been cited as elements of the Dream.

In her book "Spreading the American Dream: American Economic and Cultural Expansion 1890-1945," sociologist Emily Rosenberg identified five components of the American Dream that have shown up in countries around the world. These five points include the belief that other nations should replicate America's development; faith in a free market economy; support for free trade agreements and foreign direct investment; promotion of free flow of information and culture; and acceptance of government protection of private enterprise.

The American Dream was aided by a number of factors that gave the United States a competitive advantage over other countries. For starters, it is relatively isolated geographically, compared to many other countries, and enjoys a temperate climate. It has a culturally diverse population that businesses use to foster innovation in a global landscape. Its abundant natural resources – including oil, arable land and long coastlines – generate food and income for the country and its residents.

Terming it a "dream" also carries with it a sense that these ideals aren't necessarily what has played out in the lives of many actual Americans and those who hope to become Americans. The criticism that reality falls short of the American Dream is at least as old as the idea itself. The spread of settlers into Native American lands, slavery, the limitation of the vote (originally) to white male landowners, and a long list of other injustices and challenges have undermined the realization of the Dream for many who live in the United States.

As income equality has grown in the U.S, starting in the 1970s, the American Dream has begun to seem less attainable for those who aren't already affluent or born to affluence. According to U.S. Census family income data, real family income began to grow much more among the top income group than among other segments of American society. For example, the Federal Reserve's Survey of Consumer Finances show that in 2016, the top 10% of the income distribution got roughly a quarter of all income and held more than three-quarters of all wealth.

These realities, however, do not diminish the luster of the American Dream as an ideal and a beacon to all nations. 

RELATED TERMS
  1. Index of Economic Freedom

    An index of economic freedom is a method of scoring and ranking ...
  2. Limited Government

    Limited government is a political system in which legalized force ...
  3. American Express Card

    An American Express card is an electronic payment card branded ...
  4. Millennials: Finances, Investing, ...

    Millennial is the name given to the generation born between 1982 ...
  5. Foreign

    Foreign is a non-U.S. company with securities trading on the ...
  6. Mixed Economic System

    A mixed economic system is one that features characteristics ...
Related Articles
  1. Financial Advisor

    Money and Minimalism: The New American Dream

    The American Dream always called for big spending on big items, but maybe it's time to rethink how our money can get us there.
  2. Insights

    What is the American Dream in 2016?

    The American Dream is still alive and well, but it looks very different than it used to.
  3. Personal Finance

    6 Ways To Find Your Dream Job

    Find out what job you really want to do and tips for getting there.
  4. Financial Advisor

    Should You Rent or Buy a Home?

    Owning a home is part of the American dream, but it is a major financial undertaking with considerable pros and cons.
  5. Retirement

    5 Retirement Questions Everyone Must Answer

    Retirement planning can be overwhelming at first, if you can answer these five questions, you're well on your way to generating a solid retirement plan.
  6. Insights

    President Trump's Speech to Congress (Full Text as Prepared for Delivery)

    Read President Trump's full prepared remarks for his address to Congress.
  7. Insurance

    How Americans Spend Their Money

    On the surface, Americans are spending most of their money on necessities such as transportation and shelter. But how much of that spending is pure excess?
  8. Personal Finance

    Comparing Investment Strategies: The 1% Vs. the 99%

    Discover how the wealthy 1% differ from the other 99% when it comes to investment opportunities and other financial management concerns.
  9. Insurance

    6 Signs That You've Made It to the Middle Class

    If you can check off each of these points, you are likely a member of the middle class.
RELATED FAQS
  1. What does the American Dream mean to different generations?

    Find out what has caused the American Dream to change radically from the Baby Boom generation to the members of Generation ... Read Answer >>
Trading Center