Better Off
Whose Economy? Perceptions Of National Economic Performance During Unequal Growth
Daniel Hopkins
Public Opinion Quarterly, forthcoming
Abstract:
Perceptions of national economic performance are a cornerstone of American public opinion and of presidential approval. Yet much of our knowledge about economic perceptions comes from political surveys conducted in the 1970s and 1980s, prior to the recent increase in income inequality. This article updates our understanding of economic perceptions by combining the 1978-2010 Michigan Surveys of Consumer Attitudes with various economic indicators. It first uses aggregate data to show that, despite rising inequality, Americans of all incomes continue to agree about national economic performance. In past work, snapshots from elections create the impression that these assessments of economic performance are influenced only by income growth among the wealthy. Examining more than 215,000 respondents over three decades, however, we learn that income growth among the poor is frequently more influential. This article thus identifies an attitudinal mechanism by which the poor's economic condition can profoundly influence American politics.
----------------------
Christopher Ellis
Political Research Quarterly, forthcoming
Abstract:
This article explores the extent, and possible causes, of income-based biases in representation of citizens by members of the 110th Congress. The author finds that the preferences of wealthier citizens are modestly but significantly better reflected in the choices of their congressional representatives than are the preferences of poorer citizens. More importantly, the author shows that education, political sophistication, political engagement, ethnicity, and other sociodemographic factors can explain only a small part of this representation gap. Biases in representation across income lines appear to be driven by income alone, or at least not by politically relevant factors correlated with income.
----------------------
Pay-to-play politics: Informational lobbying and contribution limits when money buys access
Christopher Cotton
Journal of Public Economics, forthcoming
Abstract:
We develop a game theoretic model of informational lobbying between two interest groups and a politician, in which the politician can require political contributions in exchange for access. The analysis considers three claims: (1) the rich have better access to politicians than less-wealthy groups, (2) this access advantage makes the rich better off and skews policy in their favor, and (3) contribution limits can reduce the rich group advantage and result in less-skewed policy. We show that the rich do have better access, with the politician always offering access to the rich groups and only sometimes offering access to the less-wealthy group. This does not, however, mean that the rich group is better off or that policy is biased in its favor. The politician sets access fees to extract the greatest amount of rent from the political process. When only the rich group has access, its expected benefit from gaining access is fully offset by its payment to the politician. In this case, the less-wealthy interest group who is not targeted by the politician is better off. Contribution limits decrease the politician's ability to extract rent, which improves the payoffs of rich interests and decreases politician payoffs. Finally, the paper presents a novel beneft of contribution limits: they can encourage the formation of lobby groups or the search for evidence, which results in more evidence disclosure and better policy.
----------------------
The Expanding Social Safety Net
Casey Mulligan
NBER Working Paper, December 2011
Abstract:
Inflation-adjusted spending on means-tested subsidies have increased sharply since 2007, and most of this growth was due to changes in eligibility rules, and increases in subsidies per eligible person, rather than increases in the number of people who would have been eligible under pre-recession subsidy rules. The non-elderly parts of the safety net have increased from about $10,000 per year of non- or under-employment by non-elderly household heads and spouses in 2007 to almost $15,000 per year in 2010, adjusted for inflation. From 2007 to 2010, inflation-adjusted safety net spending increased $35,000 for every added year of non-employment or under-employment. As a result, the average private returns to employment are substantially less than they were in 2007.
----------------------
Public Opinion, Organized Labor, and the Limits of New Deal Liberalism, 1936-1945
Eric Schickler & Devin Caughey
Studies in American Political Development, October 2011, Pages 162-189
Abstract:
The seemingly wide opening for liberal domestic policy innovation by the U.S. federal government in the early-to-mid-1930s gave way to a much more limited agenda in the late 1930s and 1940s. The latter years saw the consolidation and gradual extension of several key programs (e.g., Social Security and Keynesian macroeconomic management), but also the frustration of liberal hopes for an expansive "cradle-to-grave" welfare state marked by strong national unions, national health insurance, and full employment policies. Drawing upon rarely used early public opinion polls, we explore the dynamics of public opinion regarding New Deal liberalism during this pivotal era. We argue that a broadly based reaction against labor unions created a difficult backdrop for liberal programmatic advances. We find that this anti-labor reaction was especially virulent in the South but divided even Northern Democrats, thus creating an effective wedge issue for Republicans and their Southern conservative allies. More generally, we find that the mass public favored most of the specific programs created by the New Deal, but was hardly clamoring for major expansions of the national government's role in the late 1930s and 1940s. These findings illuminate the role played by the South in constraining New Deal liberalism while also highlighting the tenuousness of the liberal majority in the North.
----------------------
Who Owns What? Some Reflections on the Foundation of Political Philosophy
Lloyd Gerson
Social Philosophy and Policy, January 2012, Pages 81-105
Abstract:
Neither a doctrine of rights nor a doctrine of justice can provide a non-question-begging foundation for political philosophy. Instead, all political philosophical theories must rest on the recognition of the existence of moral agents, individual members of a natural kind capable of entering into associations with other moral agents. Beginning with moral agency, we can deduce that for there to be any associations, political or otherwise, there has to be the mutual recognition of self-ownership. The nature of moral agency excludes the possibility that groups like states or societies or nations can be moral agents. From moral agency and self-ownership, we can deduce the exigency of property ownership. On this basis, we can explain a state of affairs as just when and only when there is no aggression against moral agents. And we can show that the only nonarbitrary right is the right to self-ownership and property ownership. Thus, A has a right to p means: to deprive A of p is unjust. So, rights are founded on justice and justice is founded on property and property is founded on self-ownership and the recognition of self-ownership is a necessary condition for the mutual recognition of moral agency, the only possible basis for the existence of human associations. Thus, rights and justice are derivative or dependent concepts; they are not basic or foundational.
----------------------
Gains and Gaps: Changing Inequality in U.S. College Entry and Completion
Martha Bailey & Susan Dynarski
NBER Working Paper, December 2011
Abstract:
We describe changes over time in inequality in postsecondary education using nearly seventy years of data from the U.S. Census and the 1979 and 1997 National Longitudinal Surveys of Youth. We find growing gaps between children from high- and low-income families in college entry, persistence, and graduation. Rates of college completion increased by only four percentage points for low-income cohorts born around 1980 relative to cohorts born in the early 1960s, but by 18 percentage points for corresponding cohorts who grew up in high-income families. Among men, inequality in educational attainment has increased slightly since the early 1980s. But among women, inequality in educational attainment has risen sharply, driven by increases in the education of the daughters of high-income parents. Sex differences in educational attainment, which were small or nonexistent thirty years ago, are now substantial, with women outpacing men in every demographic group. The female advantage in educational attainment is largest in the top quartile of the income distribution. These sex differences present a formidable challenge to standard explanations for rising inequality in educational attainment.
----------------------
Who Are the Winners and the Losers? Transitions in the U.S. Household Income Distribution
John Hisnanick
Review of Radical Political Economics, December 2011, Pages 467-487
Abstract:
In the five decades since Kuznets (1955) published his hypothesis on income inequality, a large and significant portion of the work on income distribution and inequality has involved using cross-sectional data for developmental comparisons at the intra- and international levels. Using cross-sectional data, these studies have tracked inequality trends that were deemed the consequence of growth and technical progress due to fiscal manipulations, such as levying taxes and granting subsidies to satisfy some welfare target. While this prior work provided valuable insight at the macroeconomic level on the interrelationship of development, economic growth, and income inequality, only over the last few decades has the research emphasis shifted from an understanding of the implications of income inequality at the aggregate level to that at the individual level. Using cross-sectional data it is possible to track income groups over time, but not the composition nor the characteristics of these groups, which are likely to change over time and affect their position in the income distribution. On the other hand, with the availability of longitudinal, micro-level data it has become possible to investigate in more detail underlying facets of income distribution, such as income mobility, and the lack of it, among households. Using three panels of the Survey of Income and Program Participation (SIPP) (1993, 1996, and 2001) and building upon the methodological suggestions of Jarvis and Jenkins (1998) and Jenkins (2000), this paper looks at a household's economic and demographic characteristics relative to their position in the income distribution. For example, results indicate that between 1996-1999, 13 million households experienced changes in their annual income that resulted in their moving up or down two or more quintiles in the income distribution. On the other hand, 39 percent of households (38.5 million) remained in the same quintile between 1996-1999 with the majority of these households experiencing intra-quintile movements. Of notable interest is that of those households remaining in the fourth and top quintiles between 1996-1999; 70 percent and 65 percent, respectively, experienced positive intra-quintile gains in income ranging, on average, from $3,550 to $10,812 annually.
----------------------
Social Policy and Public Opinion: How the Ideological Direction of Spending Influences Public Mood
Christopher Ellis & Christopher Faricy
Journal of Politics, October 2011, Pages 1095-1110
Abstract:
This article develops a model of public responsiveness to social policy in the United States, focusing in particular on the public's ability to distinguish between direct and indirect government spending as means of financing social benefits. We argue that public opinion should be responsive to changes in both direct (appropriations) and indirect (tax expenditures encouraging the private provision of social goals) spending. Further, the public should respond to changes in direct and indirect spending in distinct ways consistent with the divergent resource and interpretive effects of the two types of spending. We find that while public opinion is not responsive to the total amount of federal social spending, it is attentive to changes in direct and indirect spending, considered as separate concepts. The results show that the electorate treats changes in the relative allocation of government spending as representing important shifts in the ideological direction of public policy.
----------------------
Income inequality in the U.S.: The Kuznets hypothesis revisited
André Varella Mollick
Economic Systems, forthcoming
Abstract:
Using annual data from 1919 to 2002, the structural transformation hypothesis proposed by Simon Kuznets helps explain the U-shape of U.S. top 1% or 0.01% income share distributions. Flexible autoregressive lag representations are employed and generalized methods of moments reinforce our results. First, as the employment share in goods-producing activities falls, income inequality increases in the long run. Second, federal top taxation has only short-term negative impacts. Third, these major results hold to business cycle controls (linear time trend and real output fluctuations) and to robustness checks of structural changes documented for the U.S. economy around the late 1970s.
----------------------
On the Role of Capital Gains in Swedish Income Inequality
Jesper Roine & Daniel Waldenström
Review of Income and Wealth, forthcoming
Abstract:
Realized capital gains are typically disregarded in the study of income inequality. We show that in the case of Sweden this severely underestimates the actual increase in inequality and, in particular, top income shares during recent decades. Using micro panel data to average incomes over longer periods and re-rank individuals according to income excluding capital gains, we show that capital gains indeed are a reoccurring addition to rather than a transitory component in top incomes. Doing the same for lower income groups, however, makes virtually no difference. We also try to find the roots of the recent surge in capital gains-driven inequality in Sweden since the 1980s. While there are no evident changes in terms of who earns these gains (high wage earners vs. top capital income earners), the primary driver instead seems to be the drastic asset price increases on the post-1980 deregulated financial markets.
----------------------
Two of a Kind? An Empirical Investigation of Anti-Welfarism and Economic Egalitarianism
Peter Achterberg, Dick Houtman & Anton Derks
Public Opinion Quarterly, Winter 2011, Pages 748-760
Abstract:
The literature on welfare state legitimacy generally views economic egalitarianism and support for the welfare state as closely related phenomena that can be measured by means of scales that are considered highly interchangeable. This research note argues that economic egalitarianism does not necessarily coincide with support for the welfare state. Moreover, our findings point out that, especially among those with the lowest levels of education, economic egalitarianism is related to anti-welfarism - a highly critical view of the welfare state. Based on an analysis of recent Dutch representative survey data (2006), this article aims to find out whether there are in fact two ideological dimensions - support for the welfare state and economic egalitarianism. Moreover, it is shown that both dimensions can be explained differently. Although both ideological dimensions are rooted in economic security, support for the welfare state also is rooted in feelings of anomie.
----------------------
The end of destitution: Evidence from urban British working households 1904-37
Ian Gazeley & Andrew Newell
Oxford Economic Papers, January 2012, Pages 80-102
Abstract:
We estimate the reduction, almost to elimination, of absolute poverty among working households in urban Britain between 1904 and 1937. We exploit two recently-digitized data sets. The paper presents a statistical generalization, to working families in the whole of urban Britain, of the poverty decline found in the town studies by, amongst other, Bowley and Rowntree. We offer corroborative evidence and perform a simulated decomposition of the poverty reduction into its proximate causes. The two most important causes were the rise, 1904-37, of about 30% in real wages on the one hand and the reduction of one-third in the number of people in the average household over the same period. Between them, these two changes imply a near doubling of the income per capita of an average household supported by a worker on the average wage. We conclude with a discussion of deeper causes.
----------------------
Heterogeneity or True State Dependence in Poverty: The Tale Told by Twins
William Nilsson
Review of Income and Wealth, forthcoming
Abstract:
The purpose of this study is to distinguish between two different reasons that poverty could persist on an individual level. This study takes advantage of the similarity within pairs of identical twins to separate family-specific heterogeneity from true state dependence, where the experience of poverty leads to a higher risk of future poverty. The results, based on a four-variate probit model, show the importance of true state dependence in poverty. When using a poverty measure based on disposable income, family-specific heterogeneity explains between 21 and 25 percent of poverty persistence in the Swedish sample of twins.