Where you stand
Nicole Stephens et al.
Journal of Experimental Social Psychology, forthcoming
Abstract:
American universities increasingly admit first-generation students - students whose parents do not have four-year degrees. Once admitted, these students experience greater challenges adjusting to universities compared to continuing-generation students - students who have at least one parent with a four-year degree. This additional adversity is typically explained in terms of first-generation students' relative lack of economic (e.g., money) or academic (e.g., preparation) resources. We propose that this adversity also stems from a cultural mismatch between the mostly middle-class, independent norms institutionalized in American universities and the relatively interdependent norms that first-generation students are socialized with in working-class contexts before college. As predicted, an experiment revealed that framing the university culture in terms of independent norms (cultural mismatch) led first-generation students to show greater increases in cortisol and less positive/more negative emotions than continuing-generation students while giving a speech. However, reframing the university culture to include interdependent norms (cultural match) eliminated this gap.
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Timothy Johnson
Journal of Monetary Economics, forthcoming
Abstract:
Using a long time-series of U.S. income inequality, I find that the market pays higher prices for assets that hedge against increased inequality. This is consistent with the prediction of an incomplete-markets model incorporating preferences over both comparative and noncomparative consumption "goods" when the weight on the former is large. The model implies that the time-series properties of the premium can be used to identify the substitutability of these two sources of utility. There is evidence that the magnitude of the (negative) inequality risk premium is countercyclical, suggesting that agents care more about status when they are worse off.
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Social class, solipsism, and contextualism: How the rich are different from the poor
Michael Kraus et al.
Psychological Review, July 2012, Pages 546-572
Abstract:
Social class is shaped by an individual's material resources as well as perceptions of rank vis-à-vis others in society, and in this article, we examine how class influences behavior. Diminished resources and lower rank create contexts that constrain social outcomes for lower-class individuals and enhance contextualist tendencies - that is, a focus on external, uncontrollable social forces and other individuals who influence one's life outcomes. In contrast, abundant resources and elevated rank create contexts that enhance the personal freedoms of upper-class individuals and give rise to solipsistic social cognitive tendencies - that is, an individualistic focus on one's own internal states, goals, motivations, and emotions. Guided by this framework, we detail 9 hypotheses and relevant empirical evidence concerning how class-based contextualist and solipsistic tendencies shape the self, perceptions of the social environment, and relationships to other individuals. Novel predictions and implications for research in other socio-political contexts are considered.
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Social capital, household income, and preferences for income redistribution
Eiji Yamamura
European Journal of Political Economy, December 2012, Pages 498-511
Abstract:
This paper explores how social capital influences individual preferences for income redistribution. Social capital is measured by participation in community activities. After controlling for individual characteristics, I find that people are more likely to express preferences for income redistribution in areas with higher rates of community participation. This is more clearly so in high-income groups than in low-income groups. I infer that individuals' preferences for income redistribution are influenced by psychological externalities. Because the data is from surveys, I also consider the role of expressive behavior. I also consider the hypothesis that behavior is influenced by social distance.
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Economic Insecurity and Social Stratification
Bruce Western et al.
Annual Review of Sociology, 2012, Pages 341-359
Abstract:
Economic insecurity describes the risk of economic loss faced by workers and households as they encounter the unpredictable events of social life. Our review suggests a four-part framework for studying the distribution and trends in these economic risks. First, a focus on households rather than workers captures the microlevel risk pooling that can smooth income flows and stabilize economic well-being. Second, insecurity is related to income volatility and the risk of downward mobility into poverty. Third, adverse events such as unemployment, family dissolution, or poor health commonly trigger income losses. Fourth, the effects of adverse events are mitigated by insurance relationships provided by government programs, employer benefits, and the informal support of families. Empirical research in these areas reveals high levels of economic insecurity among low-income households and suggests an increase in economic insecurity with the growth in economic inequality in the United States.
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Richard Layt
European Sociological Review, August 2012, Pages 498-511
Abstract:
The ‘income inequality hypothesis' holds that beyond a certain level of gross domestic product (GDP) per capita, the association between absolute income, health and mortality weakens, and the distribution of income across a society becomes more important as a determinant of a range of outcomes including average mental and physical health. Recent reviews suggest that the empirical reality of the income inequality hypothesis is now established but fierce debate remains about what explains the association. In this article we describe three hypotheses that have emerged in the literature to explain the association-the social capital, the status anxiety and the neo-materialist hypotheses before operationalizing each, and testing their ability to explain the relationship between income inequality measured using the GINI coefficient and mental well-being measured using the WHO5 scale. We use multi-level models and data from the European Quality of Life Survey which contains information from 30 countries and over 35,000 individuals. Results give most support to the status anxiety and social capital hypotheses and almost no support to the neo-materialist hypothesis. Measures representing the social capital hypothesis reduce the coefficient measuring income inequality by 55% in high GDP countries and render it insignificant as well as providing the best fitting model as measured by AIC and BIC value. However, variables representing the status anxiety hypothesis reduce the income inequality coefficient by more in lower GDP countries.
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Equality of opportunity and the distribution of long-run income in Sweden
Anders Björklund, Markus Jäntti & John Roemer
Social Choice and Welfare, July 2012, Pages 675-696
Abstract:
Equality of opportunity is an ethical goal with almost universal appeal. The interpretation taken here is that a society has achieved equality of opportunity if it is the case that what individuals accomplish, with respect to some desirable objective, is determined wholly by their choices and personal effort, rather than by circumstances beyond their control. We use data for Swedish men born between 1955 and 1967 for whom we measure the distribution of long-run income, as well as several important background circumstances, such as parental education and income, family structure and own IQ before adulthood. We address the question: in Sweden, given its present constellation of social policies and institutions, to what extent is existing income inequality due to circumstances, as opposed to ‘effort'? Our results suggest that several circumstances, importantly both parental income and own IQ, are important for long-run income inequality, but that variations in individual effort account for the most part of that inequality.
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Does Having a Cadre Parent Pay? Evidence from the First Job Offers of Chinese College Graduates
Hongbin Li et al.
Journal of Development Economics, November 2012, Pages 513-520
Abstract:
We estimate the wage premium associated with having a cadre parent in China using a recent survey of college graduates carried out by the authors. The wage premium of having a cadre parent is 15 percent, and this premium cannot be explained by other observables such as college entrance exam scores, quality of colleges and majors, a full set of college human capital attributes, and job characteristics. These results suggest that the remaining premium could be the true wage premium of having a cadre parent.
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Adam Smith and Malthus on high wages
A.M.C. Waterman
European Journal of the History of Economic Thought, Summer 2012, Pages 409-429
Abstract:
For Adam Smith, capital accumulation was necessary and sufficient for high wages. But for Malthus it is not necessary because if workers choose to delay marriage the equilibrium real wage will rise even if the economy will be stationary; it is not sufficient because land scarcity causes wages and profits to fall with accumulation in the absence of technical progress. The first qualification signals a post-Revolutionary recognition that the lower orders have it in their own power to improve their condition. The second qualification is the defining assumption of the new, ‘classical' political economy of the English School.
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Inequality Aversion and Voting on Redistribution
Wolfgang Höchtl, Rupert Sausgruber & Jean-Robert Tyran
European Economic Review, forthcoming
Abstract:
Some people have a concern for a fair distribution of incomes while others do not. Does such a concern matter for majority voting on redistribution? Fairness preferences are relevant for redistribution outcomes only if fair-minded voters are pivotal. Pivotality, in turn, depends on the structure of income classes. We experimentally study voting on redistribution between two income classes and show that the effect of inequality aversion is asymmetric. Inequality aversion is more likely to matter if the "rich" are in majority. With a "poor" majority, we find that redistribution outcomes look as if all voters were exclusively motivated by self-interest.
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The Redistributional Impact of Nonlinear Electricity Pricing
Severin Borenstein
American Economic Journal: Economic Policy, August 2012, Pages 56-90
Abstract:
Electricity regulators often mandate increasing-block pricing (IBP) - i.e., marginal price increases with the customer's average daily usage - to protect low-income households from rising costs. IBP has no cost basis, raising a classic conflict between efficiency and distributional goals. Combining household-level utility billing data with census data on income, I find that IBP in California results in modest wealth redistribution, but creates substantial deadweight loss relative to the transfers. I also show that a common approach to studying income distribution effects by using median household income within census block groups may be misleading.
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Steven Allender et al.
Journal of Epidemiology & Community Health, September 2012, Pages 803-808
Background: The aims of this study were to assess whether deprivation inequality at small area level in England is associated with coronary heart disease (CHD) mortality rates and to assess whether this provides evidence of an association between area-level and individual-level risk.
Methods: Mortality rates for all wards in England were calculated using all CHD deaths between 2001 and 2006. Ward-level deprivation was measured using the Carstairs Index. Deprivation inequality within local authorities (LAs) was measured by the IQR of deprivation for wards within the LA. Relative deprivation for wards was measured as the modulus of the difference between deprivation for the ward and average deprivation for all neighbouring wards.
Results: Deprivation inequality within LAs was positively associated with CHD mortality rates per 100 000 (eg, all men β; 95% CI=2.7; 1.1 to 4.3) after adjustment for absolute deprivation (p<0.001 for all models). Relative deprivation for wards was positively associated with CHD mortality rates per 100 000 (eg, all men 1.4; 0.7 to 2.1) after adjustment for absolute deprivation (p<0.001 for all models). Subgroup analyses showed that relative deprivation was independently associated with CHD mortality rates in both affluent and deprived wards.
Conclusions: Rich wards surrounded by poor areas have higher CHD mortality rates than rich wards surrounded by rich areas, and poor wards surrounded by rich areas have worse CHD mortality rates than poor wards surrounded by poor areas. Local deprivation inequality has a similar adverse impact on both rich and poor areas, supporting the hypothesis that income inequality of an area has an impact on individual-level health outcomes.
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Educational Differences in U.S. Adult Mortality: A Cohort Perspective
Ryan Masters, Robert Hummer & Daniel Powers
American Sociological Review, August 2012, Pages 548-572
Abstract:
We use hierarchical cross-classified random-effects models to simultaneously measure age, period, and cohort patterns of mortality risk between 1986 and 2006 for non-Hispanic white and non-Hispanic black men and women with less than a high school education, a high school education, and more than a high school education. We examine all-cause mortality risk and mortality risk from heart disease, lung cancer, and unpreventable cancers. Findings reveal that temporal reductions in black and white men's and women's mortality rates were driven entirely by cohort changes in mortality. Findings also demonstrate that disparate cohort effects between education groups widened the education gap in all-cause mortality risk and mortality risk from heart disease and lung cancer across this time period. Educational disparities in mortality risk from unpreventable cancers, however, did not change. This research uncovers widening educational differences in adult mortality and demonstrates that a cohort perspective provides valuable insights for understanding recent temporal changes in U.S. mortality risk.
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The Scarring Effects of Bankruptcy: Cumulative Disadvantage Across Credit and Labor Markets
Michelle Maroto
Social Forces, forthcoming
Abstract:
As the recent economic crisis has demonstrated, inequality often spans credit and labor markets, supporting a system of cumulative disadvantage. Using data from the National Longitudinal Survey of Youth, this research draws on stigma, cumulative disadvantage and status characteristics theories to examine whether credit and labor markets intersect through the event of bankruptcy to disadvantage certain individuals over time. The transmission of bankruptcy's stigma across markets occurs in a specific legal setting where, even though the current U.S. Bankruptcy Code grants bankrupters a fresh start through debt forgiveness, the Fair Credit Reporting Act limits bankrupters' ability to begin anew because it permits employers to access credit reports. My findings highlight these ambiguities and show that, net of their previous labor market statuses, bankrupters spend less time working and have lower earnings than nonbankrupters. Thus, having become bankrupt exposes people to subsequent disadvantage in the labor market.
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Convergence in income inequality? Evidence from panel unit root tests with structural breaks
Pei-Chien Lin & Ho-Chuan Huang
Empirical Economics, August 2012, Pages 153-174
Abstract:
This paper empirically tests whether there is evidence of convergence in income inequality, as predicted by several versions of the neoclassical growth model, using a large panel of annual data for the 48 contiguous states in the US over the 1916-2005 period. By implementing the panel LM unit root test developed by Im et al. (Oxford Bull Econ Stat 67:393-419, 2005, Panel LM unit-root tests with trend shifts, Mimeo, 2010) that allows for the presence of structural breaks and heterogeneity in the panel, we find overwhelming evidence in support of convergence in income inequality. In addition, the results are robust to alternative inequality indicators used, different notions of stochastic convergence defined, and additional cross-sectional correlation considered.
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Why Has Regional Income Convergence in the U.S. Stopped?
Peter Ganong & Daniel Shoag
Harvard Working Paper, July 2012
Abstract:
The past thirty years have seen a dramatic decrease in the rate of income convergence across states and in population flows to wealthy places. We develop a model where migration drives convergence and its disappearance. The model predicts that increases in housing prices in rich areas generate (1) a divergence in the skill-specific returns to productive places, (2) a redirection of low-skilled migration, (3) diminished human capital convergence, and (4) continued convergence among places with unconstrained housing supply. Using a new panel measure of housing-supply regulations, we confirm these predictions and the role of housing in the end of convergence.
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Scott Alan Carson
Economics & Human Biology, forthcoming
Abstract:
We explore relationships among BMI variation, wealth, and inequality in the 19th century US. There was an inverse relationship between BMI and average state-level wealth and a small, inverse relationship with wealth inequality. After controlling for wealth and inequality, farmers had greater BMI values than workers in other occupations, and blacks had greater BMI values because of nutritional deprivation in utero.
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Social Inequalities and Mortality in Europe - Results from a Large Multi-National Cohort
Valentina Gallo et al.
PLoS ONE, July 2012
Background: Socio-economic inequalities in mortality are observed at the country level in both North America and Europe. The purpose of this work is to investigate the contribution of specific risk factors to social inequalities in cause-specific mortality using a large multi-country cohort of Europeans.
Methods: A total of 3,456,689 person/years follow-up of the European Prospective Investigation into Cancer and Nutrition (EPIC) was analysed. Educational level of subjects coming from 9 European countries was recorded as proxy for socio-economic status (SES). Cox proportional hazard model's with a step-wise inclusion of explanatory variables were used to explore the association between SES and mortality; a Relative Index of Inequality (RII) was calculated as measure of relative inequality.
Results: Total mortality among men with the highest education level is reduced by 43% compared to men with the lowest (HR 0.57, 95% C.I. 0.52-0.61); among women by 29% (HR 0.71, 95% C.I. 0.64-0.78). The risk reduction was attenuated by 7% in men and 3% in women by the introduction of smoking and to a lesser extent (2% in men and 3% in women) by introducing body mass index and additional explanatory variables (alcohol consumption, leisure physical activity, fruit and vegetable intake) (3% in men and 5% in women). Social inequalities were highly statistically significant for all causes of death examined in men. In women, social inequalities were less strong, but statistically significant for all causes of death except for cancer-related mortality and injuries.
Discussion: In this European study, substantial social inequalities in mortality among European men and women which cannot be fully explained away by accounting for known common risk factors for chronic diseases are reported.
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Consumption and Social Identity: Evidence from India
Melanie Khamis, Nishith Prakash & Zahra Siddique
Journal of Economic Behavior & Organization, August 2012, Pages 353-371
Abstract:
We examine spending on consumption items which have signaling value in social interactions across groups with distinctive social identities in India, where social identities are defined by caste and religious affiliations. Using nationally representative micro data on household consumption expenditures, we find that disadvantaged caste groups such as Other Backward Castes spend eight percent more on visible consumption than Brahmin and High Caste groups while social groups such as Muslims spend fourteen percent less, after controlling for differences in permanent income, household assets and household demographic composition. The differences across social groups are significant and robust and these differences persist within different sub populations. We find that the higher spending of OBC households on visible consumption is diverted from education spending, while Muslim households divert spending from visible consumption and education towards greater food spending. Additionally, we find that these consumption patterns can be partly explained as a result of the status signaling nature of the consumption items. We also discuss alternative sources of differences in consumption patterns across groups which stem from religious observance.