How Income Inequality Is Related to Tolerance for Inequality

Thursday, 2 July 2015: 8:30 AM-10:00 AM
TW2.1.04 (Tower Two)
Martin Schröder, University of Marburg, Marburg, Germany
This submission uses data from individuals of forty countries, taken from four waves of the International Social Survey Programme (1987, 1992, 1999, 2009). Using multilevel, fixed effects and hybrid regressions, it shows that more tolerance for income inequality exists when actual inequality is higher. This link exists when controlling for country- and individual-level variables, it exists between countries and it exists within countries over time, as actual inequality increases tolerance of income inequality, but not vice versa. However, the link between tolerated and factual inequality weakens over time (with successive waves from the International Social Survey Programme), because while income inequality increased in most countries, tolerance for income inequality only partially followed.

While existing research does not show whether more income inequality brings more tolerance for income inequality, this paper contributes to an old controversy on whether material structures influence social norms or whether social norms influence material structures. It shows that while existing studies may be right that more income inequality leads to more demands for redistribution, this effect is likely attenuated by people adapting their moral tolerance for inequality to increased levels of actual inequality. The paper also shows that actual income inequality conforms less and less to what people see as fair so that there is an increasing distance between people’s normative aspirations and actual social inequality.