Fair Shot
Social Distancing, Internet Access and Inequality
Lesley Chiou & Catherine Tucker
NBER Working Paper, April 2020
Abstract:
This paper measures the role of the diffusion of high-speed Internet on an individual's ability to self-isolate during a global pandemic. We use data that tracks 20 million mobile devices and their movements across physical locations, and whether the mobile devices leave their homes that day. We show that while income is correlated with differences in the ability to stay at home, the unequal diffusion of high-speed Internet in homes across regions drives much of this observed income effect. We examine compliance with state-level directives to avoid leaving your home. Devices in regions with either high-income or high-speed Internet are less likely to leave their homes after such a directive. However, the combination of having both high income and high-speed Internet appears to be the biggest driver of propensity to stay at home. Our results suggest that the digital divide -- or the fact that income and home Internet access are correlated -- appears to explain much inequality we observe in people's ability to self-isolate.
Social Security and Trends in Inequality
Sylvain Catherine, Max Miller & Natasha Sarin
University of Pennsylvania Working Paper, February 2020
Abstract:
Recent influential work finds large increases in inequality in the U.S., based on measures of wealth concentration that notably exclude the value of social insurance programs. This paper revisits this conclusion by incorporating Social Security retirement benefits into measures of wealth inequality. Wealth inequality has not increased in the last three decades when Social Security is accounted for. When discounted at the risk-free rate, real Social Security wealth increased substantially from $5.6 trillion in 1989 to just over $42.0 trillion in 2016. When we adjust for systematic risk coming from the covariance of Social Security returns with the market portfolio, this increase remains sizable, growing from over $4.6 trillion in 1989 to $34.0 trillion in 2016. Consequently, by 2016, Social Security wealth represented 58% of the wealth of the bottom 90% of the wealth distribution. Redistribution through programs like Social Security increases the progressivity of the economy, and it is important that our estimates of wealth concentration reflect this.
Does Trust in Government Increase Support for Redistribution? Evidence from Randomized Survey Experiments
Kyle Peyton
American Political Science Review, May 2020, Pages 596-602
Abstract:
Why have decades of high and rising inequality in the United States not increased public support for redistribution? An established theory in political science holds that Americans’ distrust of government decreases their support for redistribution, but empirical support draws primarily on regression analyses of national surveys. I discuss the untestable assumptions required for identification with regression modeling and propose an alternative design that uses randomized experiments about political corruption to identify the effect of trust in government on support for redistribution under weaker assumptions. I apply this to three survey experiments and estimate the effects that large, experimentally induced increases in political trust have on support for redistribution. Contrary to theoretical predictions, estimated effects are substantively negligible, statistically indistinguishable from zero, and comparable to estimates from two placebo experiments. I discuss implications for theory building about causes of support for redistribution in an era of rising inequality and eroding confidence in government.
Income Inequality and State Parties: Who Gets Represented?
Gerald Wright & Elizabeth Rigby
State Politics & Policy Quarterly, forthcoming
Abstract:
Recent studies of representation at the national and state levels have provided evidence that elected officials’ votes, political parties’ platforms, and enacted policy choices are more responsive to the preferences of the affluent, while those with average incomes and the poor have little or no impact on the political process. Yet, this research on the dominance of the affluent has overlooked key partisan differences in the electorate. In this era of hyperpartisanship, we argue that representation occurs through the party system, and we test whether taking this reality into account changes the story of policy dominance by the rich. We combine data on public preferences and state party positions to test for income bias in parties’ representation of their own co-partisans. The results show an interesting pattern in which underrepresentation of the poor is driven by Democratic parties pushing the more liberal social policy stances of rich Democrats and Republican parties reflecting the particularly conservative economic policy preferences of rich Republicans. Thus, we have ample evidence that the wealthy, more often than not, do call the shots, but that the degree to which this disproportionate party responsiveness produces less representative policies depends on the party in power and the policy dimension being considered. We conclude by linking this pattern of influence and “coincidental representation” to familiar changes which define the transformation of the New Deal party system.
Turning Up the Heat: The Discouraging Effect of Competition in Contests
Dawei Fang, Thomas Noe & Philipp Strack
Journal of Political Economy, forthcoming
Abstract:
We study contests in which contestants are homogeneous and have convex effort costs. Increasing contest competitiveness, by making prizes more unequal, scaling up the competition, or adding new contestants, always discourages effort. These results have significant implications: although often criticized as evidence of laxity or cronyism, muting competition (e.g., adopting softer grading curves or less high-powered promotion systems) can both reduce inequality and increase output. Holding promotion contests at the division level rather than the firm level can boost employees’ effort. Our results are also consistent with personnel policies that feature egalitarian pay systems and dismissal of worst-performing employees.
Changes in Assortative Matching: Theory and Evidence for the US
Pierre-Andre Chiappori, Monica Costa Dias & Costas Meghir
NBER Working Paper, April 2020
Abstract:
The extent to which like-with like marry is particularly important for inequality as well as for the outcomes of children that result from the union. In this paper we discuss approaches to the measurement of changes in assortative mating. We derive two key conditions that a well-defined measure should satisfy. We argue that changes in assortativeness should be interpreted through a structural model of the marriage market; in particular, a crucial issue is how they relate to variations in the economic surplus generated by marriage. We propose a very general criterion of increase in assortativeness, and show that almost all indices used in the literature are implied by our criterion with one notable exception, that moreover violates one of our conditions. Finally, we use our approach to evaluate the evolution of assortative matching in the US over the last decades, and conclude that assortative matching has increased, particularly at the top of the education distribution.
Passing the buck to the wealthier: Reference-dependent standards of generosity
Jonathan Berman et al.
Organizational Behavior and Human Decision Processes, March 2020, Pages 46-56
Abstract:
Who is expected to donate to charity, and how much should they give? Intuitively, the less financially constrained someone is the more they should give. How then do people evaluate who is constrained and who has money to spare? We argue that perceptions of spare money are reference-dependent with respect to one’s current self: those who earn more than oneself are perceived as having an abundance of spare money and thus as ethically obligated to donate. However, those higher earners themselves report having little to spare, and thus apply lower donation standards to themselves. Moreover, a meta-analysis of our file-drawer reveals an asymmetry: individuals overestimate the spare money of higher earners but estimate the scant spare money of lower earners more accurately. Across all incomes assessed, people “pass the buck” to wealthier others (or to their future wealthier selves), who in turn, “pass the buck” to even wealthier others.
From Aristocratic to Ordinary: Shifting Modes of Elite Distinction
Sam Friedman & Aaron Reeves
American Sociological Review, April 2020, Pages 323-350
Abstract:
How do elites signal their superior social position via the consumption of culture? We address this question by drawing on 120 years of “recreations” data (N = 71,393) contained within Who’s Who, a unique catalogue of the British elite. Our results reveal three historical phases of elite cultural distinction: first, a mode of aristocratic practice forged around the leisure possibilities afforded by landed estates, which waned significantly in the late-nineteenth century; second, a highbrow mode dominated by the fine arts, which increased sharply in the early-twentieth century before gently receding in the most recent birth cohorts; and, third, a contemporary mode characterized by the blending of highbrow pursuits with everyday forms of cultural participation, such as spending time with family, friends, and pets. These shifts reveal changes not only in the contents of elite culture but also in the nature of elite distinction, in particular, (1) how the applicability of emulation and (mis)recognition theories has changed over time, and (2) the emergence of a contemporary mode that publicly emphasizes everyday cultural practice (to accentuate ordinariness, authenticity, and cultural connection) while retaining many tastes that continue to be (mis)recognized as legitimate.
The Political Representation of Economic Interests: Subversion of Democracy or Middle-Class Supremacy?
Mads Andreas Elkjær & Torben Iversen
World Politics, April 2020, Pages 254-290
Abstract:
Rising inequality has caused concerns that democratic governments are no longer responding to majority demands, an argument the authors label the subversion of democracy model (sdm). The sdm comes in two forms: one uses public opinion data to show that policies are strongly biased toward the preferences of the rich; the other uses macrolevel data to show that governments aren’t responding to rising inequality. This article critically reassesses the sdm, points to potential biases, and proposes solutions that suggest a different interpretation of the data, which the authors label the representative democracy model (rdm). After testing the sdm against the rdm on public opinion data and on a new data set on fiscal policy, they find that middle-class power has remained remarkably strong over time, even as inequality has risen. The authors conclude that the rich have little influence on redistributive policies, and that the democratic state is apparently not increasingly constrained by global capital.
Rising between-workplace inequalities in high-income countries
Donald Tomaskovic-Devey et al.
Proceedings of the National Academy of Sciences, forthcoming
Abstract:
It is well documented that earnings inequalities have risen in many high-income countries. Less clear are the linkages between rising income inequality and workplace dynamics, how within- and between-workplace inequality varies across countries, and to what extent these inequalities are moderated by national labor market institutions. In order to describe changes in the initial between- and within-firm market income distribution we analyze administrative records for 2,000,000,000+ job years nested within 50,000,000+ workplace years for 14 high-income countries in North America, Scandinavia, Continental and Eastern Europe, the Middle East, and East Asia. We find that countries vary a great deal in their levels and trends in earnings inequality but that the between-workplace share of wage inequality is growing in almost all countries examined and is in no country declining. We also find that earnings inequalities and the share of between-workplace inequalities are lower and grew less strongly in countries with stronger institutional employment protections and rose faster when these labor market protections weakened. Our findings suggest that firm-level restructuring and increasing wage inequalities between workplaces are more central contributors to rising income inequality than previously recognized.
What do the upwardly mobile think they deserve, and why? A multi-method investigation
Brent Simpson & David Melamed
Research in Social Stratification and Mobility, forthcoming
Abstract:
We ask how upward intra-generational occupational mobility affects the incomes people believe they deserve, as well as their satisfaction with their current incomes. We argue that the upwardly mobile feel that they deserve lower incomes, relatively to those who experience no mobility or horizontal mobility, as a result of a relative deprivation process. We test this argument with two different studies. The first study uses representative data from the United States to demonstrate that upward occupational mobility is associated with depressed deserved incomes. The second study is an experiment designed to manipulate the experience of upward, downward and horizontal occupational mobility and to test the proposed causal mechanism. Results support the hypotheses, including the prediction that the impact of intra-generational upward mobility on satisfaction with one’s income is mediated by a sense of relative deprivation. We conclude with a discussion of implications, including the role that experiments can play in research on stratification and mobility.