Inequality has become a malignant, contagious disease. It feeds, it grows, it attaches itself to nearly all aspects of life. It poisons or impedes many of our relationships. Above all, it is a threat to the health and stability of our democratic republic. It has become the major issue of our time. We can see more clearly how and why it has become so as we review eight major features of our society. Refer to the diagram below as you read.
This paper shows that higher levels of perceived wage inequality are associated with a weaker (stronger) belief into meritocratic (non-meritocratic) principles as being important in determining individual wages. This finding is robust to the use of an instrumental-variable estimation strategy which takes the potential issue of reverse causality into account, and it is further corroborated using various complementary measures of individuals' perception of the chances and risks associated with an unequal distribution of economic resources, such as their perception of the chances of upward mobility. I finally show that those individuals perceiving a high level of wage inequality also tend to be more supportive of redistributive policies and progressive taxation, and that they tend to favor the political left, suggesting a feedback effect of inequality perceptions into the political-economic sphere. Taken together, these findings suggest that high levels of perceived wage inequality have the potential to undermine the legitimacy of market outcomes.
This paper shows that higher levels of perceived wage inequality are associated with a weaker (stronger) belief into meritocratic (non-meritocratic) principles as being important in determining individual wages. This finding is robust to the use of an instrumental-variable estimation strategy which takes the potential issue of reverse causality into account, and it is further corroborated using various complementary measures of individuals' perception of the chances and risks associated with an unequal distribution of economic resources, such as their perception of the chances of upward mobility. I finally show that those individuals perceiving a high level of wage inequality also tend to be more supportive of redistributive policies and progressive taxation, and that they tend to favor the political left, suggesting a feedback effect of inequality perceptions into the political-economic sphere. Taken together, these findings suggest that high levels of perceived wage inequality have the potential to undermine the legitimacy of market outcomes.
Since Aristotle, a vast literature has suggested that economic inequality has important political consequences. Higher inequality is thought to increase demand for government income redistribution in democracies and to discourage democratization and promote class conflict and revolution in dictatorships. Most such arguments crucially assume that ordinary people know how high inequality is, how it has been changing, and where they fit in the income distribution. Using a variety of large, cross-national surveys, we show that, in recent years, ordinary people have had little idea about such things. What they think they know is often wrong. Widespread ignorance and misperceptions of inequality emerge robustly, regardless of the data source, operationalization, and method of measurement. Moreover, we show that the perceived level of inequality – and not the actual level – correlates strongly with demand for redistribution and reported conflict between rich and poor. We suggest that most theories about political effects of inequality need to be either abandoned or reframed as theories about the effects of perceived inequality.
Do people in different countries understand and frame the principle of meritocracy differently? This question is the starting point for this cross-national analysis of the moral repertoires of meritocracy in four countries: Germany, Norway, Slovenia and the United Kingdom. The authors pursue a mixed methods approach, using data from the European Social Survey 2016 and qualitative data from group discussions. In these discussions, citizens openly talked about issues like inequality and social policy, which allows us to study their understandings and framings of meritocracy. The authors show that the issue of unequal rewards does not only find different levels of support, but also that people – corresponding to the context they live in – have different understandings of which merits should count. The authors identify a 'market success meritocracy' in the UK, a work-centred understanding in Germany, a 'common good meritocracy' in Norway, and non-salience of this issue in Slovenia. ; Peer Reviewed
ABSTRACT Cross-national studies on happiness have focused on differences in level of happiness. The focus of this paper is on spread in happiness in the nation, also called 'inequality in happiness'. Inequality in happiness in nations can be measured by the size of the standard deviation of responses to survey questions about the 'overall appreciation of one's life-as-a-whole'. This paper considers spread in happiness in 28 countries around 1980. Contrary to notions of a 'divided' society none of these countries shows a bi-modal distribution of happiness. All distribution are uni-modal, but the distributions are not equally flat. There are considerable differences in size of the standard deviations. These differences are not a statistical artifact of variation in level of happiness and appear quite constant through time. Inequality in happiness appears to be greater in the socio-economically most unequal countries and smaller in politically democratic and economically developed nations. Contrary to expectation, inequality in happiness appears to be more closely linked to social equality among rich natio
The idea that a Study of Social and Economic Inequalities (SSEI) should be undertaken in Australia was first proposed in 1988 by the then Minister for Social Security, Brian Howe. The main focus of the Study is to shed new light on various dimensions of inequality in Australia - both economic and social - and to investigate the factors causing them. The research involves the analysis of existing data rather than the collection of new data, a task which has been facilitated by the public availability of unit record and other data collected by the Australian Bureau of Statistics. By adopting an empirical approach, the study will inform the development of government policies directed at alleviating those forms of inequality requiring policy action. Some of the work is being conducted in an international comparative context, thus providing a framework in which we in Australia can learn from experience in other countries where appropriate. The five main themes of the Study are: Money Income Inequality, Poverty and Living Standards in Australia; Non-Monetary Benefits and Income Inequality; Factors Contributing to Inequalities in Monetary Income; Economic Inequality over the Family Life Cycle; and International Dimensions of Inequality and Redistribution. As Directors of the Study, one of our first tasks was to bring together researchers associated with the Study and with other organisations in Australia in order to review what is currently known about inequality in Australia. To this end, a two day Conference was held at the University of New South Wales in July 1991. This report contains some of the papers presented at that Conference, organised under the theme: 'Some Factors Causing Inequality'. The other main theme 'Government and Redistribution', is covered in SSEI Monograph No. 1. Together these reports represent an overview of the current state of knowledge and point to areas where further research is required. Some of that research will be conducted as part of the Study and will be reported on in due course.
Over the last two decades, income inequality has increased in most developed welfare states. Therefore, redistributive policies are high on the political agenda of many countries. From a policy perspective, the correct empirical assessment of the redistributive effects of taxes and benefits is important to develop a well-designed redistributive policy mix. This thesis contributes to the understanding and measurement of redistribution by examining redistributive policies and income inequality and their interdependencies. The first empirical analysis explores the size and structure of effective redistribution in a broad sample of European welfare states. Besides answering the question of how different components of the tax and transfer system contribute to disposable income inequality, it also investigates whether the findings are sensitive to the underlying measurement method. Chapter 3 presents two detailed case studies of Germany and the United Kingdom and examines whether the structure of fiscal policies has changed over the last two decades. The analysis provides a comprehensive dynamic analysis of effective progressivity and redistribution by including all major fiscal elements: direct taxation, pay roll taxes, indirect taxes and benefits. Chapter 4 focuses on the identification of the causal effect of redistributive spending policies on income inequality by using a dynamic panel approach and some exogenous variation in social spending levels as an instrument. In contrast to the previous chapters, it explicitly discusses possible second-order effects of redistributive policies. Chapter 5 introduces the concept of inequality of opportunity instead of the traditional inequality of outcome approach. Given that previous estimates of unfair inequality could only provide lower bounds, the study suggests a new panel estimator which additionally allows identifying an upper bound of inequality of opportunity. The approach is illustrated by comparing Germany and the United States based on harmonized micro data. Overall, the book shows that tax benefit systems substantially reduce income inequality in all EU member states, with distinct redistributive capacities of different welfare state instruments. The amount of effective redistribution is significantly reduced when considering indirect taxes and second-order effects. Finally, while tax benefit systems equalize outcomes, they do not reveal a differential impact on unequal opportunities.
This paper analyzes economic inequality in the United States and makes a connection between rising inequality and "Financialization" since the 1970's. I provide an overview of how and why income and wealth inequality have changed over time. The increase in inequality since the 1970's is correlated with an increase in Financialization, measured by a Financialization index that I created. Financialization, defined as the increasing size, power and influence of the financial sector in the economy and politics, has changed the economic and political landscape in the United States in a way that increases economic inequality.
Citizenship is an active role, requiring information to enable people to deliberate and arrive at decisions that they can then effectively voice. This article argues that the cumulative evidence of research is that mainstream media fail to provide such information and the essential analysis to buttress it. The result is information detriment, a significant element within a broader citizen detriment. This problem is only minimally addressed by the proliferation of information accessible through the widening availability of online and digital resources. Deepening inequality is translated into citizen detriment because of the growing cost of information resources. Evidence is provided of the significant advantages of the better off in an increasingly commercial and costly information environment, both as consumers of information and through lobbying, as sources of ideas and information in the political and public arena. The fundamental problem at the heart of this issue, therefore, is that of growing material inequality more than media and communication practice and policy.
This paper argues for the importance of individuals' tolerance of inequality for economic growth. By using the political ideology of governments as a measure of revealed tolerance of inequality, the paper shows that controlling for ideology improves the accuracy with which the effects of inequality are measured. Results show that inequality reduces growth but more so in societies where people perceive it as being relatively unfair. Further results indicate that legal quality and social trust are likely transmission channels for the effects of inequality.
Income inequality and its potential effect on human wellbeing is one of the key research areas in social science. Likewise, there is a lively debate about the optimal degree of government intervention to ensure wellbeing of citizens. The paper investigates impact of inequality and welfare on happiness in a panel of West European countries from 1970 to 2002, taking into account both individual and country-level variables. The results suggest that inequality hurts our wellbeing. Welfare states are happier than countries with limited welfare. Public policy implications are discussed.
Wage inequality in Chile has remained high for decades and it is currently at the center of the political agenda. Increasing education of workers is expected to contribute to reduce wage inequality. Based on historical trends of age, education, and returns to education, this paper attempts to forecast wage inequality. Despite an increase in average earnings due to higher levels of education of workers, high levels of wage inequality within age groups and within education groups produce that forecasted wage inequality remains high for the next 10-year period. The structure of the Chilean labor market appears to imply that there is a high level of underlying wage inequality. Nevertheless, the good news are that the labor market structure seems to prevent further deteriorations of wage inequality.
In: Phillips , L T , Tepper , S J , Goya-Tocchetto , D , Davidai , S , Ordabayeva , N , Mirza , M U , Szaszi , B , Day , M V , Hauser , O P & Jachimowicz , J M 2020 ' Inequality in People's Minds ' PsyArXiv Preprints . https://doi.org/10.31234/osf.io/vawh9
The extent of inequality that people perceive in the world is often a better predictor of individual and societal outcomes than the level of inequality that actually exists. As such, scholars from across the social sciences, including economics, sociology, psychology, and political science, have recently worked to understand individuals' (mis)perceptions of inequality. Unfortunately, many researchers treat the process underlying such perceptions as a black box, focusing predominantly on lay people's numeric estimates of inequality, and paying less attention to how people come to form these perceptions or what these perceptions mean to participants. In the current review, we draw on research in perception, cognition, and developmental and social psychology, to introduce a novel comprehensive framework for understanding individuals' perceptions of inequality. We argue that subjective perceptions of inequality should be viewed as a process that unfolds across five interlinked and iterative stages. To form perceptions of the scope of inequality in society, people need to (1) have access to inequality cues in the world, (2) attend to these cues, (3) comprehend these cues, (4) process these cues (often succumbing to motivational biases), and (5) summarize these cues into a meaningful representation of inequality. Our framework highlights when and why lay people may misperceive the scope of inequality in society and provides a roadmap for research to examine how the processes in people's minds affect the outcomes researchers are ultimately interested in.
This paper provides an overview of research on income inequality in China over the period of economic reform. It presents the results of two main sources of evidence on income inequality and, assisted by various decompositions, explains the reasons income inequality has increased rapidly and the Gini coefficient is now almost 0.5. This paper evaluates the degree of income inequality from the perspectives of people's subjective well-being and government concerns. It poses the following question: has income inequality peaked? It also discusses the policy implications of the analysis. The concluding comments of this paper propose a research agenda and suggest possible lessons from China's experience that may be useful for other developing countries.