Opportunity Matters: Inequity-Aversion and Attitudes Towards Redistribution in Europe and the United States
Inequity-Aversion and Attitudes towards
Redistribution in Europe and the United States
-Extended Abstract-
Economic inequality is high up on the political agenda. After receiving a first big push through the Occupy Wall Street protests that followed the global financial crisis, the reduction of inequality is now frequently pronounced a top priority by politicians around the world. In his famous 2011-speech in Osawatomie, Kansas, Barack Obama set the tone for his second term, warning that American values are being hollowed out by increasingly unequal opportunities and the disappearance of the middle class.1 On the other side of the Atlantic, the recent electoral victory by the leftist Syriza in Greece is not just a rejection of imposed austerity measures, it is an outcry over increasing disparities between the rich and the poor that is echoed widely across Europe. Despite the attention growing economic inequality is receiving in everyday life, the study of democratic politics is struggling to explain how this might influence attitudes towards inequality and redistribution.
No matter whether it is the reality of or the discourse on economic inequality that is changing, citizens’ perceptions of economic disparities are likely to be a ff ected, and one might wonder what this implies for attitudes toward these disparities. Of course, skeptics argue against the importance of perceptions as they regard them as exogenous to ideological views or values that people hold (Feldman, 1988; Evans and Andersen, 2006), or that they adjust them in a way that serves their material self-interest (Benabou and Tirole, 2006). However, experimental research by political economists has shown that people are indeed quite sensitive to the distribution of economic resources (and thus the structure of inequality). In particular, people frequently act in an inequity-averse way, rejecting unequal outcomes if these outcomes are determined by factors beyond individual control rather than by such within individual control (Adams, 1965; Fehr and Schmidt, 1999; Sauermann and Kaiser, 2010). It is the objective of this paper to explore whether inequity-aversion extends beyond the laboratory setting and whether it can help us to better understand attitudes towards inequality and redistribution of actual voters.
To this end, I analyze social survey data from 27 countries including the United States and most European democracies.2 These countries have been the focus of literature debating the role of inequality and redistribution in democracies. One major challenge in bringing research on inequity-aversion out of the laboratory is the difficulty of determining when a person considers the distribution of economic resources to be unjustified. The empirical analysis here gives support to the experimental finding that people usually accept economic inequalities that reflect factors within individual control and reject inequalities that are determined by factors beyond individual control. This aversion to the e ff ect of factors beyond individual control appears to be general and not self-centered, meaning that people reject the effect of these factors on everyone’s and not just their own income. As inequality due to factors beyond individual control is an indication of unequal opportunities (Roemer, 1998), I suggest that–in the realm of redistribution–inequity-aversion is best understood as aversion to inequality in opportunity. At least for countries within the scope of this study, Western democracies, one might with some confidence suggest that people in those countries indeed endorse the idea of equality of opportunity.
Earlier studies were quick to conflate people’s perception of the importance of factors within individual control and factors beyond it (Alesina and Angeletos, 2005; Benabou and Tirole, 2006). However, the analysis here illustrates that treating them separately can offer more explanatory value. What is especially interesting about perceptions of external success factors is that they do have an empirical basis, meaning that income di ff erences between gender or ethnic groups can be objectively assessed. While the findings presented in this paper suggest perceptions and facts might differ strongly, it is up to further research to determine in how far perceptions and facts about the effect of external factors on economic success correspond, and to ask what explains the discrepancy between the two.
(1) The full text of the speech can be found at http: // www.whitehouse.gov / the-press-o ffi ce / 2011 / 12 / 06 / remarks-president-economy-osawatomie-kansas.
(2) Data comes from the International Social Survey Programme (ISSP) 2009-module ’Social Inequality’.
References
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