Fair share
Vivekinan Ashok, Ilyana Kuziemko & Ebonya Washington
NBER Working Paper, September 2015
Abstract:
Despite the large increases in economic inequality since 1970, American survey respondents exhibit no increase in support for redistribution, in contrast to the predictions from standard theories of redistributive preferences. We replicate these results but further demonstrate substantial heterogeneity by demographic groups. In particular, the two groups who have most moved against income redistribution are the elderly and African-Americans. We find little evidence that these subgroup trends are explained by relative economic gains or growing cultural conservatism, two common explanations. We further show that the elderly trend is uniquely American, at least relative to other developed countries with comparable survey data. While we are unable to provide definitive evidence on the cause of these two groups' declining redistributive support, we offer additional correlations which may offer fruitful directions for future research on the topic. One story consistent with the data on elderly trends is that older Americans worry that redistribution will come at their expense, in particular via cuts to Medicare. We find that the elderly have grown increasingly opposed to government provision of health insurance and that controlling for this tendency explains about 40% of their declining support for redistribution. For blacks, controlling for their declining support of race-targeted aid explains nearly 45% of their differential decline in redistributive preferences (raising the question of why support for race-targeted aid has fallen during a period when black economic catch-up to whites has stalled).
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Income Inequality Explains Why Economic Growth Does Not Always Translate to an Increase in Happiness
Shigehiro Oishi & Selin Kesebir
Psychological Science, forthcoming
Abstract:
One of the most puzzling social science findings in the past half century is the Easterlin paradox: Economic growth within a country does not always translate into an increase in happiness. We provide evidence that this paradox can be partly explained by income inequality. In two different data sets covering 34 countries, economic growth was not associated with increases in happiness when it was accompanied by growing income inequality. Earlier instances of the Easterlin paradox (i.e., economic growth not being associated with increasing happiness) can thus be explained by the frequent concurrence of economic growth and growing income inequality. These findings suggest that a more even distribution of growth in national wealth may be a precondition for raising nationwide happiness.
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An Early-Emerging Explanatory Heuristic Promotes Support for the Status Quo
Larisa Hussak & Andrei Cimpian
Journal of Personality and Social Psychology, forthcoming
Abstract:
People often view their sociopolitical systems as fair and natural despite indisputable biases in their structure. Current theories of this phenomenon trace its roots to a motivation to alleviate anxiety and uncertainty. Here, we propose a complementary cognitive pathway for these system-endorsing attitudes. Specifically, we propose that the fundamental mechanisms through which people explain the world around them may also be a source of such attitudes. These explanatory processes are inadvertently biased to yield inherent or internal facts as explanations for a wide variety of social and natural phenomena, including sociopolitical patterns (e.g., Why are some people rich? Because they are really smart). In turn, this bias toward inherent attributions makes it seem that the observations being explained (such as the societal status quo) are legitimate and thus worthy of support. Four studies with participants as young as 4 years of age provided correlational and experimental evidence for the hypothesized link between explanatory processes and support for the status quo. These findings suggest that the tendency to endorse existing sociopolitical arrangements emerges partly on a foundation laid early in life by a basic component of human cognition.
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Personal Relative Deprivation Boosts Materialism
Hong Zhang et al.
Basic and Applied Social Psychology, forthcoming
Abstract:
Five studies investigated the relationship between personal relative deprivation and materialism. Study 1 was a cross-sectional survey that revealed a positive association between trait relative deprivation and materialism. In Studies 2a and 2b, we found that relative deprivation, as induced by unjust government policies in an imaginary scenario, increased individuals' preferences for making more profit than others. Individuals may experience relative deprivation due to unjust treatment or other factors. Study 3 manifested that sense of relative deprivation, resulting from either being treated unjustly or not, gave rise to materialistic desires. In Study 4, we found that relative deprivation influenced materialistic aspirations, above and beyond negative outcomes. Moreover, the impact of relative deprivation could be generalized to aspirations for fame.
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Elliot Weininger, Annette Lareau & Dalton Conley
Social Forces, forthcoming
Abstract:
Recent research suggests that participation in organized extracurricular activities by children and adolescents can have educational and occupational payoffs. This research also establishes that participation is strongly associated with social class. However, debate has ensued - primarily among qualitative researchers - over whether the association between class and activities stems exclusively from inequalities in objective resources and constraints or whether differing cultural orientations have a role. We address this debate using a nationally representative sample of children's time diaries, merged with extensive information on their families, to model participation in, and expenditures on, organized activities. While we cannot directly observe cultural orientations, we account for a substantially wider array of resources and constraints than previous studies. We find that, above and beyond these factors, maternal education has a consistently large effect on the outcomes we study. We discuss the plausibility of a cultural interpretation of this result, as well as alternative interpretations.
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The Externalities of Inequality: Fear of Crime and Preferences for Redistribution in Western Europe
David Rueda & Daniel Stegmueller
American Journal of Political Science, forthcoming
Abstract:
Why is the difference in redistribution preferences between the rich and the poor high in some countries and low in others? In this article, we argue that it has a lot to do with the rich and very little to do with the poor. We contend that while there is a general relative income effect on redistribution preferences, the preferences of the rich are highly dependent on the macrolevel of inequality. The reason for this effect is not related to immediate tax and transfer considerations but to a negative externality of inequality: crime. We will show that the rich in more unequal regions in Western Europe are more supportive of redistribution than the rich in more equal regions because of their concern with crime. In making these distinctions between the poor and the rich, the arguments in this article challenge some influential approaches to the politics of inequality.
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A Theory of Intergenerational Mobility
Gary Becker et al.
University of Chicago Working Paper, August 2015
Abstract:
We develop a model of intergenerational resource transmission that emphasizes the link between cross-sectional inequality and intergenerational mobility. By drawing on first principles of human capital theory, we derive several novel results. In particular, we show that, even in a world with perfect capital markets and without differences in innate ability, wealthy parents invest, on average, more in their offspring than poorer ones. As a result, persistence of economic status is higher at the top of the income distribution than in the middle. Successive generations of the same family may even cease to regress towards the mean. Moreover, we demonstrate that government interventions intended to ameliorate inequality may in fact lower intergenerational mobility - even when they do not directly favor the rich. Lastly, we consider how mobility is affected by changes in the marketplace.
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Inequality and visibility of wealth in experimental social networks
Akihiro Nishi et al.
Nature, forthcoming
Abstract:
Humans prefer relatively equal distributions of resources, yet societies have varying degrees of economic inequality. To investigate some of the possible determinants and consequences of inequality, here we perform experiments involving a networked public goods game in which subjects interact and gain or lose wealth. Subjects (n = 1,462) were randomly assigned to have higher or lower initial endowments, and were embedded within social networks with three levels of economic inequality (Gini coefficient = 0.0, 0.2, and 0.4). In addition, we manipulated the visibility of the wealth of network neighbours. We show that wealth visibility facilitates the downstream consequences of initial inequality - in initially more unequal situations, wealth visibility leads to greater inequality than when wealth is invisible. This result reflects a heterogeneous response to visibility in richer versus poorer subjects. We also find that making wealth visible has adverse welfare consequences, yielding lower levels of overall cooperation, inter-connectedness, and wealth. High initial levels of economic inequality alone, however, have relatively few deleterious welfare effects.
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The rich - love them or hate them? Divergent implicit and explicit attitudes toward the wealthy
Suzanne Horwitz & John Dovidio
Group Processes & Intergroup Relations, forthcoming
Abstract:
Adding to a growing body of work on the psychology of social class, the present research examined implicit and explicit attitudes toward rich people, standing out from much previous work that has focused on negative evaluations of people with low socioeconomic status (SES). Across three studies, we found that participants (who typically identified as middle class) implicitly, but not explicitly, favored the rich over the middle class. Although financial resources represent a continuum objectively, attitudes toward the rich seem to be conceptually distinct from evaluations of low-SES people. Additionally, we demonstrated that implicit prorich attitudes uniquely predict leniency on a rich driver who causes a car accident, while explicit attitudes do not predict such judgments. This work expands and clarifies knowledge of implicit wealth attitudes and suggests that implicit prorich attitudes are an important factor in understanding how social class influences daily life.
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Elementary School Children's Reasoning About Social Class: A Mixed-Methods Study
Rashmita Mistry et al.
Child Development, September/October 2015, Pages 1653-1671
Abstract:
The current study examined children's identification and reasoning about their subjective social status (SSS), their beliefs about social class groups (i.e., the poor, middle class, and rich), and the associations between the two. Study participants were 117 10- to 12-year-old children of diverse racial, ethnic, and socioeconomic backgrounds attending a laboratory elementary school in Southern California. Results indicated that children's SSS ratings correlated with indicators of family socioeconomic status and were informed by material possessions, lifestyle characteristics, and social and societal comparisons. Children rated the poor as having fewer positive attributes and more negative attributes than the middle class, and fewer positive attributes than the rich. Lower SSS children held less positive attitudes toward the poor than children with middle SSS ratings.
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Income Inequality in the United States in the Late 1860s
Mark Stelzner
Journal of Economic History, September 2015, Pages 889-900
Abstract:
I utilize data from the Civil War income tax to calculate the income shares of the top 1 and 0.1 percent of the population in the United States in the late 1860s - extending Thomas Piketty and Emmanuel Saez's series back in time. As we will see, income inequality during this period represents a low comparable to the late 1970s.
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Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession
Christoph Lakner & Branko Milanovic
World Bank Economic Review, forthcoming
Abstract:
We present an improved panel database of national household surveys between 1988 and 2008. In 2008, the global Gini index is around 70.5%, having declined by approximately 2 Gini points. China graduated from the bottom ranks, changing a twin-peaked global income distribution to a single-peaked one and creating an important global "median" class. 90% of the fastest growing country-deciles are from Asia, while almost 90% of the worst performers are from mature economies. Another "winner" was the global top 1%. Hence the global growth incidence curve has a distinct supine S shape, with gains highest around the median and top.
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Why are there so few working-class people in political office? Evidence from state legislatures
Nicholas Carnes
Politics, Groups, and Identities, forthcoming
Abstract:
Why do so few working-class Americans go on to hold political office? This paper uses data on state legislatures to assess several common (and often untested) explanations. Contrary to the widespread view that workers are less likely to hold office because they are less qualified, I find no relationship between the qualifications of workers in a given state and their representation in the state legislature. The shortage of the working class in office appears to have far more to do with structural characteristics of the political landscape such as parties, interest groups, and institutions. Scholars who want to understand why there are so few working-class Americans in political office - and people who want to do something about it - should probably focus on these kinds of "demand-side" forces, not on the supposed "supply-side" shortcomings of the working class.
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The distributional preferences of an elite
Raymond Fisman et al.
Science, 18 September 2015
Abstract:
We studied the distributional preferences of an elite cadre of Yale Law School students, a group that will assume positions of power in U.S. society. Our experimental design allows us to test whether redistributive decisions are consistent with utility maximization and to decompose underlying preferences into two qualitatively different tradeoffs: fair-mindedness versus self-interest, and equality versus efficiency. Yale Law School subjects are more consistent than subjects drawn from the American Life Panel, a diverse sample of Americans. Relative to the American Life Panel, Yale Law School subjects are also less fair-minded and substantially more efficiency-focused. We further show that our measure of equality-efficiency tradeoffs predicts Yale Law School students' career choices: Equality-minded subjects are more likely to be employed at nonprofit organizations.
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Asymmetric Interest Group Mobilization and Party Coalitions in U.S. Tax Politics
Alexander Hertel-Fernandez & Theda Skocpol
Studies in American Political Development, forthcoming
Abstract:
Arguments about national tax policy have taken center stage in U.S. politics in recent times, creating acute dilemmas for Democrats. With Republicans locked into antitax agendas for some time, Democrats have recently begun to push back, arguing for maintaining or even increasing taxes on the very wealthy in the name of deficit reduction and the need to sustain funding for public programs. But the Democratic Party as a whole has not been able to find a consistent voice on tax issues. It experienced key defections when large, upward-tilting tax cuts were enacted under President George W. Bush, and the Democratic Party could not control the agenda on debates over continuing those tax cuts even when it enjoyed unified control in Washington, DC, in 2009 and 2010. To explain these cleavages among Democrats, we examine growing pressures from small business owners, a key antitax constituency. We show that organizations claiming to speak for small business have become more active in tax politics in recent decades, and we track the ways in which constituency pressures have been enhanced by feedbacks from federal tax rules that encourage individuals to pass high incomes through legal preferences for the self-employed. Comparing debates over the inception and renewal of the Bush tax cuts, we show how small business organizations and constituencies have divided Democrats on tax issues. Our findings pinpoint the mechanisms that have propelled tax resistance in contemporary U.S. politics, and our analysis contributes to theoretical understandings of the ways in which political parties are influenced by policy feedbacks and by coalitions of policy-driven organized economic interests.
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Public education financing, earnings inequality, and intergenerational mobility
Christopher Herrington
Review of Economic Dynamics, October 2015, Pages 822-842
Abstract:
Among developed countries there are large differences in earnings inequality and intergenerational earnings persistence. This paper investigates public education and tax policies as a possible source for these differences. Empirical and quantitative policy experiments focus on the case of the U.S. and Norway. An overlapping generations model is developed and calibrated to match U.S. data. Functions for labor taxes and public education spending are estimated for each country and incorporated into the model. The benchmark exercise finds that taxes and public education spending account for about one-third of differences in earnings inequality and 14 percent of differences in intergenerational earnings persistence between the U.S. and Norway. Furthermore, public intervention in early childhood education more than doubles the impact of these policy changes.
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Democratic Redistribution and Rule of the Majority
Giacomo Corneo & Frank Neher
European Journal of Political Economy, forthcoming
Abstract:
Does redistribution in democracies cater to the will of the majority? We propose a direct empirical strategy based on survey data that needs not assume that voters are guided by pecuniary motives alone. We find that most democracies implement the median voter's preferred amount of redistribution and the probability to serve the median voter increases with the quality of democracy. However, there is a non-negligible share of democracies that implement a minority-backed amount of redistribution. Political absenteeism of the poor cannot explain such outcomes. Rather, they can be explained by the electoral bundling of redistribution with values and rights issues.
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Economic Inequality and Nonviolent Protest
Frederick Solt
Social Science Quarterly, forthcoming
Objective: Despite substantial theorizing, the relationship between economic inequality and participation in nonviolent protests has not been satisfactorily examined empirically.
Methods: Using multilevel models of data from four waves of the European Social Survey, this article examines whether differences in inequality across countries and over time help explain people's engagement in peaceful protest.
Results: It finds that greater inequality reduces protest participation for all those with incomes below the top quintile.
Conclusions: This result provides strong support for the relative power theory of political participation; the predictions of grievance and resource theories regarding inequality's effects on protest are not supported.
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Equilibrium Tax Rates and Income Redistribution: A Laboratory Study
Marina Agranov & Thomas Palfrey
Journal of Public Economics, October 2015, Pages 45-58
Abstract:
This paper reports results from a laboratory experiment that investigates the Meltzer-Richard model of equilibrium tax rates, inequality, and income redistribution. The experiment varies the amount of wage inequality and the political process used to determine tax rates. We find that higher inequality leads to higher tax rates; the effect is significant and large in magnitude. The tax rates and labor supply functions are both quantitatively close to the theory. The result is robust to the political institution. The theoretical model of Meltzer-Richard is extended to incorporate social preferences in the form of altruism and inequity aversion, which are found to have negligible effects in the data.
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Accounting for Changes in Income Inequality: Decomposition Analyses for the UK, 1978-2008
Mike Brewer & Liam Wren-Lewis
Oxford Bulletin of Economics and Statistics, forthcoming
Abstract:
We analyse income inequality in the UK from 1978 to 2009 in order to understand why income inequality rose very rapidly from 1978 to 1991 but then remained broadly unchanged. We find that inequality in earnings among employees has risen fairly steadily since 1978, but other factors that caused income inequality to rise before 1991 have since gone into reverse. Inequality in investment and pension income has fallen since 1991, as has inequality between those with and without employment. Furthermore, certain household types - notably the elderly and those with young children - which had relatively low incomes in the period to 1991 have seen their incomes converge with others.
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Christopher Faricy
Politics, Groups, and Identities, forthcoming
Abstract:
In this paper, I theorize and show that Democrats and Republicans both distribute money to their core class consistencies through the selection of different types of tax breaks, formally referred to as tax expenditures. The popularity of tax expenditures allows each political party to distribute federal money to unpopular constituencies in ways that reflect the economic ideology of their members. I expect and find that Democratic Party control of the White House results in an increase in the generosity of tax credits that target the working poor, and Republican Party power produces a large expansion of tax deductions, which disproportionately benefit the rich. These results have implications for distributive politics and the partisan politics of income inequality.