Possessed
Marianne Bertrand & Adair Morse
NBER Working Paper, March 2013
Abstract:
Have rising income and consumption at the top of income distribution since the early 1980s induced households in the lower tiers of the distribution to consume a larger share of their income? Using state-year variation in income level and consumption in the top first quintile or decile of the income distribution, we find evidence for such "trickle-down consumption." The magnitude of effect suggests that middle income households would have saved between 2.6 and 3.2 percent more by the mid-2000s had incomes at the top grown at the same rate as median income. Additional tests argue against permanent income, upwardly-biased expectations of future income, home equity effects and upward price pressures as the sole explanations for this finding. Instead, we show that middle income households' consumption of more income elastic and more visible goods and services appear particularly responsive to top income levels, consistent with supply-driven demand and status-driven explanations for our primary finding. Non-rich households exposed to higher top income levels self-report more financial duress; moreover, higher top income levels are predictive of more personal bankruptcy filings. Finally, focusing on housing credit legislation, we suggest that the political process may have internalized and facilitated such trickle-down.
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Can Honorific Awards Give Us Clues about the Connection between Socioeconomic Status and Mortality?
Bruce Link, Richard Carpiano & Margaret Weden
American Sociological Review, forthcoming
Abstract:
Social epidemiologists Marmot and Wilkinson argue that relative deprivation is the dominant mechanism through which socioeconomic status (SES) affects mortality. If such an argument is valid, we would expect to consistently see the influence of relative deprivation in situations where two or more highly qualified and very similar individuals are nominated in a status competition, but only one receives the status boost conferred by winning. We studied mortality experiences of Emmy Award winners, Baseball Hall of Fame inductees, and presidents and vice presidents - comparing each to nominated losers in the same competition. Our findings and results of similar studies fail to show consistent advantages for winners. The association between winning and longevity is sometimes positive, sometimes negative, and sometimes nonexistent. We conclude that the critical processes determining the strength and direction of any status effect on longevity are changes in life circumstances that result from winning or losing, rather than the processes that inexorably flow from one's relative position in a status hierarchy.
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Christine Harris & Nicole Henniger
Frontiers in Psychology, March 2013
Abstract:
In the last 5 years, the phrase "politics of envy" has appeared more than 621 times in English-language newspapers, generally in opinion essays contending that political liberalism reflects and exploits feelings of envy. Oddly, this assertion has not been tested empirically. We did so with a large adult sample (n = 357). Participants completed a Dispositional Envy Scale and questions about political ideology, socioeconomic status, and age. Envy and age were moderately correlated; younger people reported greater envy. Political ideology and envy were weakly correlated; however, this relationship was not significant when controlling for age.
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Julia Becker et al.
Personality and Social Psychology Bulletin, April 2013, Pages 442-455
Abstract:
Previous research shows that positive contact with members of advantaged groups can undermine collective action among the disadvantaged. The present work provides the first experimental evidence of this effect and introduces a moderator which highlights the fundamental role of communication about perceptions of the legitimacy of intergroup inequality. Study 1 (N = 267) focused on the lesbian/gay/bisexual/transgendered community's struggle for same-sex marriage in California. In Study 2 (N = 81), cross-group contact was initiated between members of two universities that differ in social status. Results revealed that positive cross-group contact undermined public collective action among the disadvantaged when the advantaged-group partner described their group's advantaged position as legitimate or when they did not communicate their feelings about intergroup inequality (leaving them ambiguous). In contrast, when the advantaged-group partner clearly described the intergroup inequality as illegitimate, cross-group contact did not undermine participation in public collective action.
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How Elastic Are Preferences for Redistribution? Evidence from Randomized Survey Experiments
Ilyana Kuziemko et al.
NBER Working Paper, March 2013
Abstract:
This paper analyzes the effects of information about inequality and taxes on preferences for redistribution using randomized online surveys on Amazon Mechanical Turk (mTurk). About 5,000 respondents were randomized into treatments providing interactive information on U.S. income inequality, the link between top income tax rates and economic growth, and the estate tax. We find that the informational treatment has very large effects on whether respondents view inequality as an important problem. By contrast, we find quantitatively small effects of the treatment on views about policy and redistribution: support for taxing the rich increases slightly, support for transfers to the poor does not, especially among those with lower incomes and education. An exception is the estate tax - we find that informing respondents that it affects only the very richest families has an extremely large positive effect on estate tax support, even increasing respondents' willingness to write to their U.S. senator about the issue. We also find that the treatment substantially decreases trust in government, potentially mitigating respondents' willingness to translate concerns about inequality into government action. Methodologically, we explore different strategies to lower attrition in online survey platforms and show our main results are robust across methods. A small follow-up survey one month later reveals that our results persist over time. Finally, we compare mTurk with other survey vendors and provide suggestions to future researchers considering this platform.
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Do People Save or Spend Their Inheritances? Understanding What Happens to Inherited Wealth
Jay Zagorsky
Journal of Family and Economic Issues, March 2013, Pages 64-76
Abstract:
Almost $4 trillion dollars of wealth is currently held by families with a life expectancy of less than 10 years. When that wealth is inherited, will it be retained or spent quickly? Results from the NLSY79, a longitudinal survey covering people in their 20s, 30s, and 40s suggest roughly half of all money inherited is saved and the other half spent or lost investing. These spending and saving decisions are made by a concentrated group with about one-fifth of all families getting an inheritance and about one-seventh expecting to receive an inheritance. Suggestions to increase savings from inheritances are discussed.
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Consumer markets and national income inequality: A study of 18 advanced capitalist countries
Christopher Kollmeyer
International Journal of Comparative Sociology, October 2012, Pages 400-418
Abstract:
Sociologists have paid scant attention to the possibility that the structure of the macro-economy is an important determinant of income inequality. Although prior research finds negative links between the size of the public sector and income inequality, no study to date considers whether the size of consumer markets has distributional consequences as well. To investigate this possibility, the present study measures the size of national consumer markets with the System of National Accounts used by governments to calculate gross domestic product (GDP). Based on data from 18 advanced capitalist countries over nearly a 40-year period, two-way random effects regression models reveal a strong and positive link between the size of consumer markets and income inequality. This finding is robust to the inclusion of numerous control variables, and to the consideration of endogeneity within the causal relationship. The proposed theoretical explanation centers on ideas developed by Polanyi, and suggests that economic activity in consumer markets creates higher levels of individual differentiation, and hence higher levels of income inequality, than economic activity in other sectors of the economy. The study concludes by highlighting ways future research can advance our theoretical and empirical understanding of this topic.
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The Measurement of Educational Inequality: Achievement and Opportunity
Francisco Ferreira & Jérémie Gignoux
World Bank Economic Review, forthcoming
Abstract:
Two related measures of educational inequality are proposed: one for educational achievement and another for educational opportunity. The former is the simple variance (or standard deviation) of test scores. Its selection is informed by consideration of two measurement issues that have typically been overlooked in the literature: the implications of the standardization of test scores for inequality indices, and the possible sample selection biases arising from the Program of International Student Assessment (PISA) sampling frame. The measure of inequality of educational opportunity is given by the share of the variance in test scores that is explained by pre-determined circumstances. Both measures are computed for the 57 countries in which PISA surveys were conducted in 2006. Inequality of opportunity accounts for up to 35 percent of all disparities in educational achievement. It is greater in (most of) continental Europe and Latin America than in Asia, Scandinavia, and North America. It is uncorrelated with average educational achievement and only weakly negatively correlated with per capita gross domestic product. It correlates negatively with the share of spending in primary schooling, and positively with tracking in secondary schools.
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Exploring the impact of male and female facial attractiveness on occupational prestige
Emanuela Sala et al.
Research in Social Stratification and Mobility, March 2013, Pages 69-81
Abstract:
Traditionally, social scientists have studied socio-economic inequalities mainly by looking at the impact of individuals' economic, cultural and social capital. Some scholars have recently argued that other types of resources, such as genetic and erotic capital, may also play a role in the processes that lead to the formation of social inequalities. Using a unique longitudinal dataset, the Wisconsin Longitudinal Study, this paper explores the impact of facial attractiveness on people's socio-economic standing over the life course. Methodologically, we employ a set of multilevel Growth Curve Models. Two findings clearly stand out from our analysis. Firstly, facial attractiveness does matter, both for men and women, and secondly, its impact is constant over the employment history.
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Extraordinary Wealth, Globalization, and Corruption
Benno Torgler & Marco Piatti
Review of Income and Wealth, forthcoming
Abstract:
The billionaires of the world attract significant attention from the media and the public. Surprisingly, only a limited number of studies have explored empirically the determinants of extraordinary wealth. Using a large dataset we investigate whether globalization and corruption affect extreme wealth accumulation. We find evidence that an increase in globalization increases super-affluence. In addition, we also find that an increase in corruption leads to an increase in the creation of super fortune. This supports the argument that in kleptocracies large sums are transferred into the hands of a small group of individuals.
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Long-Term Trends in Relative Earnings Mobility
Bradley Schiller & Sankar Mukhopadhyay
Social Science Quarterly, forthcoming
Objectives: The extent of individual mobility across hierarchical ranks of the income distribution is a critical factor in interpreting the sociopolitical significance of well-documented increases in cross-sectional inequality. The objective of this study is to replicate two earlier investigations of mobility, allowing one to discern trends in mobility rates and patterns.
Methods: Mobility was measured using data from NLSY79 (where NLSY is National Longitudinal Survey of Youth) for the years 1989-2004.
Results: Results show that hierarchical (relative) mobility has remained substantial and pervasive from the 1970s through the 1990s for male workers, with no evidence of any attenuation. In view of the increased distance between (absolute) income ranks, this observation is both surprising and reassuring.
Conclusion: Despite substantial increase in cross-sectional inequality, long-term mobility rates have not changed since the 1960s.
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Relative Intragenerational Economic Mobility: A Cross-Period Analysis from 1968 to 2009
John Silvia, Tim Quinlan & Joseph Seydl
Business Economics, February 2013, Pages 67-76
Abstract:
Recent debate about income inequality has occurred with good reason, as changes in income inequality are critically important for long-term economic prosperity, business profitability, and particularly for the quality and accessibility of labor in the market today. However, what is equally important and less discussed is economic mobility, or the capacity of an individual or a family to improve their financial standing, specifically as it relates to income and wealth. In this paper, we examine statistics on economic mobility in the United States. Our findings suggest that while economic mobility still exists, the likelihood of a household making a large jump out of poverty and into wealth declined from 1999 to 2009. The message of our findings to policymakers is that, rather than a redistribution of wealth from the top of the income distribution to the bottom, what is really needed is broader access to affordable education, better essential nutrition, more stable early childhood development experiences, and basic financial literacy training for all income groups.
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Superiority illusion arises from resting-state brain networks modulated by dopamine
Makiko Yamada et al.
Proceedings of the National Academy of Sciences, 12 March 2013, Pages 4363-4367
Abstract:
The majority of individuals evaluate themselves as superior to average. This is a cognitive bias known as the "superiority illusion." This illusion helps us to have hope for the future and is deep-rooted in the process of human evolution. In this study, we examined the default states of neural and molecular systems that generate this illusion, using resting-state functional MRI and PET. Resting-state functional connectivity between the frontal cortex and striatum regulated by inhibitory dopaminergic neurotransmission determines individual levels of the superiority illusion. Our findings help elucidate how this key aspect of the human mind is biologically determined, and identify potential molecular and neural targets for treatment for depressive realism.
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Endogenous Persistent Occupations and Inequality
Falilou Fall
Journal of Public Economic Theory, April 2013, Pages 292-318
Abstract:
The paper argues that human capital is the leading force determining inequality persistence. We show that, in a context of a perfect capital market where agents inherit human capital and wealth, it is the inherited human capital level that determines agents' occupational choice and investment. The critical assumption is that the entrepreneurial activity is of increasing returns to scale. This creates a higher profile of revenue for entrepreneurs. Although every agent can choose to become an entrepreneur, and although there is no barrier of entry in entrepreneurship, only those who receive a relatively higher human capital will do so. Agents whose inherited human capital is lower than the human capital threshold, endogenously determined, are better off becoming workers. Even in the context of a perfect capital market, which allows less endowed agents to borrow and invest in education, it turns out that the agents who inherit a low level of human capital bear a greater utility cost in their education investment. So they are better off investing less in education, lending their savings, and working as workers. As a result, agents' occupational choice depends on the intergenerational transmission of human capital. In the long run, the population is polarized into the rich entrepreneurs and the poor workers, magnifying inequality persistence in human capital level and revenue.
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Thomas Hayes
Social Science Quarterly, forthcoming
Objectives: This article investigates the extent to which people link policy preferences with unequal outcomes. As the American public is both aware and supportive of reducing income inequality in the abstract, it is an open question whether this concern is translated into support for policies that might help alleviate the rise in economic inequality.
Methods: Ordinary least squares (OLS) regression is used with data from the General Social Survey (GSS).
Results: The relationship between attitudes about wealth inequality and spending preferences is positive, but not strong. Moreover, there is no evidence that the least well-off are more attuned to linking attitudes about inequality with spending preferences than the upper or middle classes.
Conclusion: The main findings suggest that while citizens are able to link attitudes about inequality with spending preferences, the link might not be strong enough to propel elected officials to act as wealth inequality expands.
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Claudia Olivetti & Daniele Paserman
NBER Working Paper, February 2013
Abstract:
This paper provides a new perspective on intergenerational mobility in the United States in the late 19th and early 20th centuries. We devise an empirical strategy that allows to calculate intergenerational elasticities between fathers and children of both sexes. The key insight of our approach is that the information about socio-economic status conveyed by first names can be used to create a pseudo-link not only between fathers and sons, but also between fathers and daughters. The latter is typically not possible with historical data. We find that the father-son elasticity in economic status grows throughout the sample period. Intergenerational elasticities for daughters follow a broadly similar trend, but with some differences in timing. We argue that most of the increase in the intergenerational elasticity estimate in the early part of the 20th Century can be accounted for by the vast regional disparities in economic development, with increasing returns to human capital contributing to explain the residual. Other mechanisms such as changes in fertility, migration, and investment in public schooling, appear to have had only a minor role in explaining the trends.
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Marco Sunder
Economics & Human Biology, forthcoming
Abstract:
We present evidence on the 19th-century trend in the height of male US passport applicants. These men represent a much wealthier segment of contemporary society than found in most stature samples previously analyzed. The height trend among the wealthy is much more robust in comparison to the average population that experienced a decline in stature. The resulting increase in the ‘height gap' - by roughly one inch between cohorts born around 1820 and 1860 - is in congruence with evidence on rising wealth inequality and the notion of dietary change in antebellum America.
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Household Income Is Associated with the p53 Mutation Frequency in Human Breast Tumors
Adrienne Starks et al.
PLoS ONE, March 2013
Background: A study from Scotland reported that the p53 mutation frequency in breast tumors is associated with socio-economic deprivation.
Methods: We analyzed the association of the tumor p53 mutational status with tumor characteristics, education, and self-reported annual household income (HI) among 173 breast cancer patients from the greater Baltimore area, United States.
Results: p53 mutational frequency was significantly associated with HI. Patients with < $15,000 HI had the highest p53 mutation frequency (21%), followed by the income group between $15,000 and $60,000 (18%), while those above $60,000 HI had the fewest mutations (5%). When dichotomized at $60,000, 26 out of 135 patients in the low income category had acquired a p53 mutation, while only 2 out of 38 with a high income carried a mutation (P < 0.05). In the adjusted logistic regression analysis with 3 income categories (trend test), the association between HI and p53 mutational status was independent of tumor characteristics, age, race/ethnicity, tobacco smoking and body mass. Further analyses revealed that HI may impact the p53 mutational frequency preferentially in patients who develop an estrogen receptor (ER)-negative disease. Within this group, 42% of the low income patients (< $15,000 HI) carried a mutation, followed by the middle income group (21%), while those above $60,000 HI did not carry mutations (Ptrend < 0.05).
Conclusions: HI is associated with the p53 mutational frequency in patients who develop an ER-negative disease. Furthermore, high income patients may acquire fewer p53 mutations than other patients, suggesting that lifetime exposures associated with socio-economic status may impact breast cancer biology.