Having Over Time
A rising tide lifts all homes? Housing consumption trends for low-income households since the 1980s
Erik Hembre, Michael Collins & Samuel Wylde
Journal of Public Economics, May 2024
Abstract:
This study analyzes patterns of housing consumption and expenditures among low-income households since 1985. For households in the bottom income quintile, real monthly housing expenditures have risen from $605 to $1,045. However, these increased expenditures partially reflect housing quantity improvements, including more square footage, more rooms, and larger lot sizes. The data also show a marked improvement in housing quality, such as fewer sagging roofs, broken appliances, rodents, and peeling paint. The housing quality for low-income households improved across all 35 indicators we can measure. These quality improvements equate to between a 34 to 43 percent increase in housing consumption and suggest that a typical low-income household in 2021 experiences housing quality equivalent to the average national household in 1985. Though relative housing consumption has remained similar, this "rising tide" of housing may have additional benefits for the well-being of families and children living in better housing.
The Effect of Inequality on Redistribution: An Econometric Analysis
Michael Boskin, Kareem Elnahal & Adam Zhang
NBER Working Paper, May 2024
Abstract:
Using data on U.S. state and federal taxes and transfers over a quarter century, we estimate a regression model that yields the marginal effect of any shift of market income share from one quintile to another on the entire post tax, post-transfer income distribution. We identify exogenous income distribution changes and account for reverse causality using instruments based on exposure to international trade shocks, international commodity price shocks and national industry demand shocks, as well as lagged endogenous variables, with controls for the level of income, the business cycle and demographics. We find the degree of attenuation of market income shifts initially increases in quintile rank, peaks at the middle quintile and then falls for higher income quintiles, consistent with median voter political economy theory and what Stigler called Director's Law. We also provide evidence of considerable and systematic spillover effects on quintiles neither gaining nor losing in the "experiments," also favoring the middle quintile, what we label the greedy median voter. "Voting" and "income insurance" coalition analyses are presented. We find a strong negative relationship between average real income and redistribution and a modest effect of two year led inequality.
The Effects of Wage Information on Support for Redistributive Spending
Emily Thorson & Kris-Stella Trump
American Politics Research, forthcoming
Abstract:
Public support for redistributive policies (e.g., Medicaid) depends in part on the perceived need and deservingness of beneficiaries. However, the average citizen is not well informed about the economic conditions of their fellow citizens. In this article, we explore how information about average earnings of the working poor (a group generally seen as deserving) influences support for redistributive spending. Two survey experiments test whether support for such spending is affected by information about the average incomes of low-wage occupations (e.g., home health aides and retail sales workers). We additionally explore potential mechanisms for this effect, including empathy. An exploratory study finds an effect, but a pre-registered confirmatory study yields substantively small findings with inconsistent significance. Even when participants both receive detailed information about low-wage occupations' salaries and are encouraged to recall people who they know in those jobs, the treatment has no substantial effect. Given the strength of this treatment and the lack of consistent effects, we conclude that interventions providing information about low-income salaries (e.g., in news coverage or interpersonal conversation) are unlikely to have a substantive effect on support for redistribution.
Selected Fertility and Racial Inequality
Owen Thompson
Journal of Human Resources, May 2024, Pages 684-710
Abstract:
Racial inequality can be affected by changes in race-specific fertility patterns that influence the composition of births, in addition to post-birth factors like schools and labor markets that have been the focus of most prior research. This paper documents a large decline in the fertility of southern African American women after 1964 and argues that these fertility patterns likely led to substantial reductions in racial inequality in the next generation through a selection effect. I first show that the Black-white difference in the general fertility rate fell by approximately 40 percent between 1964 and 1970 among southern women, with no change in racial fertility differences in the North over this period. I also show that these fertility declines were much stronger among socioeconomically disadvantaged southern Black women, for instance, those with eight or fewer years of education and with four or more existing children, which led southern Black children born after 1964 to come from systematically smaller and more educated families. I then directly estimate the association between racial fertility differences and racial differences in the education and earnings of the next generation in a two-way fixed effects framework and find that selective fertility declines were conditionally associated with a reduction in the Black-white education gap of approximately 0.15 years (22 percent) and a reduction in the Black-white earnings gap of approximately six log points (16 percent). These patterns suggest that a substantial share of the Black socioeconomic progress of the 1960s and 1970s was due to selective fertility declines among less advantaged African American women in the South.
Leadership, Inequality, and Coordination: An Experimental Investigation
Aurelie Dariel, Nikos Nikiforakis & Simon Siegenthaler
NYU Working Paper, April 2024
Abstract:
How do pay inequality and risk inequality affect the willingness of teams to follow their leaders? We explore this question in a setting where leaders lead by example to mitigate the strategic uncertainty surrounding a decision. Using a simple model, we predict that pay inequality between leaders and team members undermines the effectiveness of leaders in coordinating their teams. Risk inequality can offset the negative impact of pay inequality if the leader is exposed to sufficiently more risk than the team members. We confirm both hypotheses in a large online experiment that varies the degree of pay inequality and risk inequality. Risk-averse team members and individuals who believe that their teammates are inequality-averse are the most responsive to both pay inequality and risk inequality. We obtain similar results in a lab experiment with larger teams and greater financial incentives.
How rich were the rich? An empirically-based taxonomy of pre-industrial bases of wealth
Branko Milanovic
Explorations in Economic History, July 2024
Abstract:
The paper uses fifty-three social tables, ranging from Greece in 330 BC to Mexico in 1940 to estimate the share and level of income of the top 1 percent in pre-industrial societies. The share of the top 1 percent covers a vast range from around 10 percent to more than 40 percent of society's income and does not always move together with the estimated Gini coefficient and the Inequality Extraction Ratio. I provide a taxonomy of pre-industrial societies based on the social class and type of assets (land, control of government, merchant capital, citizenship) that are associated with the top classes as well as lack of assets associated with poverty.
Age-related differences in delay discounting: Income matters
Haoran Wan et al.
Psychology and Aging, forthcoming
Abstract:
Although the authors of a recent meta-analysis concluded there were no age-related differences in the discounting of delayed rewards, they did not examine the effects of income (Seaman et al., 2022). Accordingly, the present study compared discounting by younger and older adults (Ages 35-50 and 65-80) differing in household income. Two procedures were used: the Monetary Choice Questionnaire and the Adjusting-Amount procedure. Whereas no age difference was observed between the higher income (> $80,000) age groups, a significant difference was observed between younger and older adults with lower incomes (< $50,000): The younger adults discounted more steeply than the older adults. These findings, which were observed with both discounting procedures, support our buffering hypothesis, which assumes that the scarcity associated with a lower income is a stressor that can lead to steeper discounting, but that age-related increases in emotional stability can buffer such stressors, leading to age-related differences between lower income age groups. In contrast, no age difference was observed in higher income adults who experience much less scarcity. Further support for the buffering hypothesis comes from the finding that there was no age-related difference in discounting by the lower income groups when distress was statistically controlled.
The Privileges We Do and Do Not See: The Relative Salience of Interpersonal and Circumstantial Benefits
Julia Smith, Shai Davidai & Tom Gilovich
Personality and Social Psychology Bulletin, forthcoming
Abstract:
People attend more to disadvantages in their lives than to advantages, a phenomenon known as the Headwinds/Tailwinds Asymmetry. In seven studies (N = 1,526), we present an important caveat to this pattern: When people do notice and acknowledge their advantages, they mostly focus on the benefits they receive from other people (i.e., interpersonal benefits), as opposed to benefits they receive because of their demographics, personal traits, and life circumstances (i.e., circumstantial benefits). We demonstrate that people notice and remember others who helped them rather than hurt them and that they notice the help they receive from people more than from favorable, non-interpersonal factors. Finally, we find that the tendency to notice interpersonal advantages is related to a social norm requiring people to acknowledge helpful others (but not other advantages) and that changing the salience of this norm affects people's likelihood of acknowledging the support they have received from others.