Standings
The Structure of Inequality and Americans’ Attitudes Toward Redistribution
Matthew Luttig
Public Opinion Quarterly, forthcoming
Abstract:
Income inequality has been rising substantially over the past few decades in the United States, making it the most unequal of advanced industrialized democracies. This transformation has had enormous social and political consequences. In this research note, I assess the influence of both income inequality and the changing structure of income inequality on Americans’ public policy mood. Numerous political theorists suggest that rising inequality and the shift in the distribution of income to those at the top should lead to increasing support for liberal policies. But recent evidence contradicts these theories. I empirically evaluate a number of competing theoretical predictions about the relationship between inequality and public preferences. In general, the evidence supports the claim that rising inequality has been a force promoting conservatism in the American public.
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The Status Quo and Perceptions of Fairness: How Income Inequality Influences Public Opinion
Kris-Stella Trump
Harvard Working Paper, September 2013
Abstract:
This paper argues that public opinion regarding the acceptability and desirability of income differences is influenced by actual income inequality. When income differences are (perceived to be) high, the public thinks of larger inequalities of income as fair. This phenomenon exists because of two psychological processes that advantage existing social arrangements: status quo bias and the motivation to believe in a just world. The phenomenon is demonstrated in three experiments, which show that personal experiences of inequality as well as information regarding national-level income inequality can affect perceptions of fairness in income gaps. A fourth experiment shows that at least part of this effect is due to the motivation to believe in a just world. The results can help us explain the empirical puzzle of why higher income inequality across time and space does not systematically result in higher demands for redistribution.
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Andrew Edward White et al.
Journal of Personality and Social Psychology, forthcoming
Abstract:
How do economic recessions influence attitudes toward redistribution of wealth? From a traditional economic self-interest perspective, attitudes toward redistribution should be affected by one’s financial standing. A functional evolutionary approach suggests another possible form of self-interest: That during periods of economic threat, attitudes toward redistribution should be influenced by one’s mate-value — especially for men. Using both lab-based experiments and real-world data on voting behavior, we consistently find that economic threats lead low mate-value men to become more prosocial and supportive of redistribution policies, but that the same threats lead high mate-value men to do the opposite. Economic threats do not affect women’s attitudes toward redistribution in the same way, and, across studies, financial standing is only weakly associated with attitudes toward redistribution. These findings suggest that during tough economic times, men’s attitudes toward redistribution are influenced by something that has seemingly little to do with economic self-interest — their mating psychology.
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A Theory of Optimal Inheritance Taxation
Thomas Piketty & Emmanuel Saez
Econometrica, September 2013, Pages 1851–1886
Abstract:
This paper derives optimal inheritance tax formulas that capture the key equity-efficiency trade-off, are expressed in terms of estimable sufficient statistics, and are robust to the underlying structure of preferences. We consider dynamic stochastic models with general and heterogeneous bequest tastes and labor productivities. We limit ourselves to simple but realistic linear or two-bracket tax structures to obtain tractable formulas. We show that long-run optimal inheritance tax rates can always be expressed in terms of aggregate earnings and bequest elasticities with respect to tax rates, distributional parameters, and social preferences for redistribution. Those results carry over with tractable modifications to (a) the case with social discounting (instead of steady-state welfare maximization), (b) the case with partly accidental bequests, (c) the standard Barro–Becker dynastic model. The optimal tax rate is positive and quantitatively large if the elasticity of bequests to the tax rate is low, bequest concentration is high, and society cares mostly about those receiving little inheritance. We propose a calibration using micro-data for France and the United States. We find that, for realistic parameters, the optimal inheritance tax rate might be as large as 50%–60% — or even higher for top bequests, in line with historical experience.
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Fear and Loving in Social Hierarchy: Sex Differences in Preferences for Power Versus Status
Nicholas Hays
Journal of Experimental Social Psychology, November 2013, Pages 1130–1136
Abstract:
Famous thinkers throughout history from Nepos to Machiavelli have had strong opinions about whether it is better to be feared or loved. A related debate continues today about whether it is preferable to have power or status, a distinction between resources and respect. Across three studies, I find that men desire power more than women do, whereas women desire status more than men do. Furthermore, the extent to which hierarchical differences are seen as fair and legitimate increases the desirability of status, but power legitimacy does not affect the desirability of power. This research indicates that people perceive and value power and status distinctly, and provides additional evidence that confounding the two theoretically or empirically may distort our understanding of psychological responses to social hierarchy.
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A Raw Deal: Heightened Liberalism Following Exposure to Anomalous Playing Cards
Travis Proulx & Brenda Major
Journal of Social Issues, September 2013, Pages 455–472
Abstract:
According to the meaning maintenance model, people may respond to meaning violations by affirming unrelated beliefs to which they are committed. While this affirmation generally moves in the direction of social inequality, meaning violations that are not personally threatening — but that nevertheless evoke uncertainty — should evoke a heightened preference for social equality (i.e., a socially liberal judgment). We tested this hypothesis in an experiment that exposed participants to reverse colored playing cards, where participants were subsequently more supportive of Affirmative Action if they were relatively committed to a belief that social inequality is unjust. This study demonstrates that people will make heightened socially liberal judgments following a meaning violation that is not personally threatening, and that is unrelated to the affirmed meaning frameworks.
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Nurit Shnabel et al.
European Journal of Social Psychology, October 2013, Pages 482–492
Abstract:
Applying the Needs-Based Model of Reconciliation to contexts of group disparity, two studies examined how messages from outgroup representatives that affirmed the warmth or competence of advantaged or disadvantaged groups influenced their members' intergroup attitudes. Study 1 involved natural groups differing in status; Study 2 experimentally manipulated status. In both studies, advantaged-group members responded more favorably, reporting more positive outgroup attitudes and willingness to change the status quo toward equality, to messages reassuring their group's warmth. Disadvantaged-group members responded more favorably to messages affirming their group's competence. Study 2 further demonstrated that the effectiveness of reassuring a disadvantaged group's competence stemmed from restoring its threatened dimension of identity, irrespective of a change of the status quo. In line with Social Identity Theory (Tajfel & Turner, 1979), these results indicate that beyond the competition over tangible resources, groups are concerned with restoring threatened dimensions of their identities. Exchanging messages that remove identity-related threats may promote not only positive intergroup attitudes but also greater willingness to act collectively for intergroup equality.
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Making Up People — The Effect of Identity on Performance in a Modernizing Society
Karla Hoff & Priyanka Pandey
Journal of Development Economics, January 2014, Pages 118–131
Abstract:
It is typically assumed that being hard-working or clever is a trait of the person, in the sense that it is always there, in a fixed manner. However, in an experiment with 288 high-caste and 294 low-caste students in India, cues to one’s place in the caste system turned out to starkly influence the expression of these traits. The experiment allows us to discriminate between two classes of models that give different answers to the question of how someone’s identity affects his behavior. Models of the fixed self assume that identity is a set of preferences. Models of the frame-dependent self assume that identity entails a set of mental models that are situationally evoked and that mediate information processing. Our findings suggest that the effect of identity on intellectual performance depends on which of the individual’s mental models a given situation evokes, with potentially large impacts on human capital formation.
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Work Norms, Social Insurance and the Allocation of Talent
Giacomo Corneo
Journal of Public Economics, November 2013, Pages 79–92
Abstract:
This paper challanges the view that weak work norms make generous welfare states economically unsustainable. I develop a dynamic model of family-transmitted values that has a laissez-faire equilibrium with strong work norms coexisting with a social-insurance equilibrium with weak work norms. While the former has better incentives, the latter induces more intergenerational occupational mobility which improves the allocation of talent and fuels growth. Strong work norms arise as a way for parents to protect their children from the risk of lacking talent. I present evidence from microdata showing that generous social insurance correlates with high intergenerational occupational mobility and that more mobile individuals endorse weaker work norms.
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Loss aversion, education, and intergenerational mobility
Liam Malloy
Education Economics, forthcoming
Abstract:
Existing empirical work looking at the effects of parental income on IQ, schooling, wealth, race, and personality is only able to explain about half of the observed intergenerational income elasticity. This paper provides a possible behavioral explanation for this elasticity in which heterogeneous agents in sequential generations choose their education levels in the face of loss-averse preferences and weak borrowing constraints. These borrowing-constrained agents make education investment choices in part to avoid consumption losses rather than to maximize lifetime resources. The model generates a positive intergenerational income elasticity even when there are functioning capital markets to finance education investments. I find empirical support for the J-shape education decision rule generated by the model and show that it is mostly successful in matching the asymmetric intergenerational transition rates between income quintiles of white families.
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Educational Inequality and the Returns to Skills
Shelly Lundberg
University of California Working Paper, September 2013
Abstract:
Research and policy discussion about the diverging fortunes of children from advantaged and disadvantaged households have focused on the skill disparities between these children – how they might arise and how they might be remediated. Analysis of data from the National Longitudinal Study of Adolescent Health reveals another important mechanism in the determinants of educational attainment – differential returns to skills for children in different circumstances. Though the returns to cognitive ability are generally consistent across family background groups, personality traits have very different effects on educational attainment for young men and women with access to different levels of parental resources. These results are consistent with a model in which the provision of focused effort in school is complementary with parental inputs while openness, associated with imagination and exploration, is a substitute for information provision by educated parents and thus contributes to resilience in low-resource environments. In designing interventions to improve outcomes for disadvantaged children, we need to be cognizant of interactions between a child's skills and their circumstances.
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Benjamin Newman
Journal of Politics, forthcoming
Abstract:
In exploring the impact of economic problems on public opinion, scholarship has nearly exclusively focused on personal and national economic experiences. At present, little to no research analyzes the impact of economic distress within one's social network on an individual's attitudes. Drawing upon network and contact theories, it is argued that financial hardship experienced vicariously through one's friends should influence an individual's views about the political economy, and ultimately, their economic policy preferences, such as support for redistribution. Utilizing national survey data, this article demonstrates that having economically distressed friends heightens perceived class-based bias in the political system — namely, that the rich have undue influence over politics. Further, moderated regression analysis reveals that this effect depends upon the prevalence of political discussion within one's friendship network. Finally, mediation analysis reveals that, by heightening perceived class-based bias, distress within one's friendship network indirectly increases support for government efforts to redress inequality.
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Wealth Disparities Before and After the Great Recession
Fabian Pfeffer, Sheldon Danziger & Robert Schoeni
ANNALS of the American Academy of Political and Social Science, November 2013, Pages 98-123
Abstract:
The collapse of the labor, housing, and stock markets beginning in 2007 created unprecedented challenges for American families. This study examines disparities in wealth holdings leading up to the Great Recession and during the first years of the recovery. All socioeconomic groups experienced declines in wealth following the recession, with higher wealth families experiencing larger absolute declines. In percentage terms, however, the declines were greater for less advantaged groups as measured by minority status, education, and prerecession income and wealth, leading to a substantial rise in wealth inequality in just a few years. Despite large changes in wealth, longitudinal analyses demonstrate little change in mobility in the ranking of particular families in the wealth distribution. Between 2007 and 2011, one-fourth of American families lost at least 75 percent of their wealth, and more than half of all families lost at least 25 percent of their wealth. Multivariate longitudinal analyses document that these large relative losses were disproportionally concentrated among lower-income, less educated, and minority households.
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Convergence in National Income Distributions
Rob Clark
Social Forces, forthcoming
Abstract:
Previous studies have drawn attention to cross-national convergence across a wide range of topics. In this study, I test for convergence in a new empirical setting, examining the degree to which national income distributions have become more similar to one another over time. Using the Standardized World Income Inequality Database, I construct a set of samples that vary in longitudinal and cross-sectional coverage during the 1965–2005 period. The results show that national income distributions have converged substantially since the 1970s. Moreover, the rise in inequality among Eastern European nations during the early 1990s accounts for only about 30 percent of all convergence during the sample period. Additional analyses suggest that globalization may be playing an important role in homogenizing inequality levels. Finally, a decomposition of the convergence trend shows that income distributions are drawing closer together both between and within world regions. Overall, convergence is the product of (a) inequality levels rising among egalitarian societies; and (b) inequality levels declining in stratified nations, indicating a trend toward moderate levels of inequality from both directions.
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Biomedical Enhancements as Justice
Jeesoo Nam
Bioethics, forthcoming
Abstract:
Biomedical enhancements, the applications of medical technology to make better those who are neither ill nor deficient, have made great strides in the past few decades. Using Amartya Sen's capability approach as my framework, I argue in this article that far from being simply permissible, we have a prima facie moral obligation to use these new developments for the end goal of promoting social justice. In terms of both range and magnitude, the use of biomedical enhancements will mark a radical advance in how we compensate the most disadvantaged members of society.
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Minimising Misery: A New Strategy for Public Policies Instead of Maximising Happiness?
Orsolya Lelkes
Social Indicators Research, October 2013, Pages 121-137
Abstract:
This paper raises the issue whether public policy should focus on minimizing unhappiness rather than maximizing happiness. Using a cross-sectional multi-country dataset with 57,000 observations from 29 European countries, we show that unhappiness varies a great deal more across social groups than (high levels of) happiness does. Our findings are robust to several alternative specifications, using both self-reported life satisfaction and self-reported happiness, and different cut-off points for defining unhappiness (dissatisfaction) and high levels of happiness (satisfaction). While misery appears to strongly relate to broad social issues (such as unemployment, poverty, social isolation), bliss might be more of a private matter, with individual strategies and attitudes, hidden from the eye of a policy-maker. The social cost of unhappiness may be also reflected in the immense cost of mental health problems. Preventing avoidable unhappiness, however, needs to be complemented with other strategies for promoting happiness, perhaps on a more decentralized level, given the different causes of bliss and that of misery.
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Nikhil Sengupta & Chris Sibley
Personality and Social Psychology Bulletin, forthcoming
Abstract:
Contact with the dominant group can increase opposition, among the disadvantaged, to social policies that would benefit their group. This effect can be explained in terms of contact promoting support for an ideology of meritocracy, which privileges the distribution of societal resources based on individual merit, rather than group-level disadvantage. We tested this ideological mechanism in a large, nationally representative sample of Māori (a disadvantaged group in New Zealand; N = 1,008). Positive intergroup contact with the dominant group (New Zealand Europeans) predicted increased opposition to a topical reparative policy (Māori ownership of the foreshore), and this was fully mediated by increased support for the ideology of meritocracy. Intergroup contact may enable the ideological legitimation of inequality among members of disadvantaged groups, engendering political attitudes that are detrimental to their group’s interests. Contact with ingroup members had the opposite effect, increasing support for reparative policy by reducing subscription to meritocratic ideology.
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Maarten Vendrik
Journal of Public Economics, September 2013, Pages 131–149
Abstract:
Adaptation, anticipation and social-reference effects on happiness are strongly interrelated phenomena. However, in the existing empirical literature these phenomena are mainly studied in isolation from each other. Therefore, using SOEP panel data for the years 1984-2007, this study offers an integrated investigation of the implications of these three phenomena for the dynamics of individual life satisfaction. I focus on the short and long-run effects of income and social reference income, but I control for similar dynamics with respect to a large set of control variables. GMM estimates for instrumented income variables in an error correction model indicate an insignificant future income effect, a significant and positive current income effect, and an insignificant long-run income effect on life satisfaction with significant hedonic adaptation. Social reference income has a significant, negative and strong impact in the long run, but not in the short run. Consequently, increasing own income and reference income by the same percentage tends to have an insignificant effect in the long term, but a significant and positive effect in the short term. Adaptation to an income shock and reinforcement of a reference income shock take place for more than 90 percent within three years. On the basis of these results a more comprehensive explanation of the Easterlin Paradox than those given in the literature is presented.
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Procedural fairness and the tolerance for income inequality
Hyejin Ku & Timothy Salmon
European Economic Review, November 2013, Pages 111–128
Abstract:
This paper presents an experiment investigating what cultural and institutional factors underlying a society might render its members more or less tolerant of inequality in favor of greater efficiency. The specific institutional factors we address concern the fairness in the procedures or mechanisms through which individuals believe initial positions or roles in society are determined. Subjects' initial positions (rich vs. poor) are determined based on various criteria (random, meritocratic, arbitrary, and rewarding uncooperative behavior) and individuals' willingness to approve Pareto improvement when the improvement is mainly in favor of the already rich is measured. Our findings show that individuals' willingness to accept higher but more unequal outcomes depends on the source of the initial inequality and random assignment leads to the most tolerance for disadvantageous inequality, generating doubt about commonly held views concerning meritocracy. Moreover, holding the procedures constant, subjects reveal greater tolerance for inequality when self and the opponent share common group identity.
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Qiang Shen, Jia Jin & Qingguo Ma
Behavioural Brain Research, 1 November 2013, Pages 609–617
Abstract:
In the past decade, considerable amounts of studies have explored the neural underpinnings of empathic response toward the positive and negative feelings of others, such as pain and social exclusion, in the field of neuroeconomics. In addition, empathic response of observing other's financial gains and losses have recently started to gain increasing attention in this interdisciplinary field. However, the effects of inequality-averse social preference on individuals’ response toward other's gains and losses have not yet been clearly characterized. This work conducted an electrophysiological study with a simple gambling task to explore how inequality aversion matters in modulating neural temporal dynamics towards self and others’ gains and losses using scalp-recorded event-related potentials (ERPs). The electrophysiological data demonstrated increased amplitude of P300 toward self's monetary gains and losses independent of advantageous and disadvantageous status. Intriguingly, subjects in the high pay group evoked more pronounced gain loss disparity of feedback-related negativity (FRN) amplitude toward others than themselves. Meanwhile, such a pattern was not observed among the subjects in the low pay group. Therefore, the current double dissociation results of FRN and P300 may indicate that advantageous status enhances subjects’ empathic response toward others’ pecuniary outcome, giving a direct electrophysiological evidence for the economic modeling on inequality aversion behavior.