Faced with income inequality, Americans support government action

 
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Income inequality — broadly speaking, the gap between the earnings of the rich and of the poor — has widened in America over recent decades, scholars have shown. But amid all the debate about what’s to blame for the increasingly lopsided distribution, little is known about public opinion on policy changes.

An academic study worth reading: “Exposure to Rising Inequality Shapes Americans’ Opportunity Beliefs and Policy Support,” in Proceedings of the National Academy of Sciences, August 2017.

Study summary:

Americans, when they realize the extent to which their country’s poor are getting poorer and rich are getting richer, are keen to redistribute. So theorizes a team of scholars led by Leslie McCall of City University of New York. McCall and her colleagues believe that rising concern about income inequality is masked by the fact that few Americans, compared to residents of other rich countries, support redistributive social policies.

The authors hypothesize that as income inequality rises and becomes more apparent, Americans are becoming more skeptical of the “American Dream” — the idea that anyone who works hard can get ahead.

McCall and her colleagues designed three experiments to test Americans’ beliefs about the factors that cause some to thrive and some to struggle in the modern economy. After exposing a set of respondents to a nonpartisan news report about growing income inequality and another set to a non-related news article, they ask questions targeting so-called “opportunity beliefs.” These are the factors that help Americans get ahead, such as being born wealthy (a “structural” advantage) and hard work (an “individual” pursuit). Further tests exposed survey participants to a “rags-to-riches” story exemplifying the American Dream. The largest survey group was a nationally representative sample of 1,501 Americans.

Key takeaways:  

  • Exposure to information about income inequality seems to make Americans more skeptical about the American Dream.
  • Participants exposed to the story about income inequality were more likely to rate structural factors (family connections) as important to getting ahead and less likely to name individual factors such as hard work.
  • Participants exposed to the story about income inequality and then to a story exemplifying the American Dream still rated structural factors as more important for getting ahead than individual hard work.
  • Respondents exposed to the news story of income inequality were statistically more likely to support government intervention (such as social programs for the poor) and corporate intervention (such as reducing the differences in pay between executives and low-skilled workers).
  • This same group was also less likely to say that low-income individuals are responsible for their situation or that inequality “does not need to be reduced.”
  • These findings suggest that “beliefs about the opportunity structure in society may play an important role in shaping Americans’ evaluations of equity-enhancing policies in the wake of rising economic inequality.”

Helpful resources:

One of the best sources of economic data is the Federal Reserve Economic Database (FRED) at the Federal Reserve Bank of St. Louis. We discussed how to visualize that and other economic data in this tip sheet.

The Pew Research Center has a number of surveys on how Americans perceive income inequality.

The New York Times published an interactive chart in August 2017, based on the work of some topic economists, that explored the changing share of income accruing to the very top earners since World War II.

Other research:

An often-cited work on economic inequality was this 2014 paper in Science by Thomas Piketty and Emmanuel Saez: “Inequality in the Long Run.”

More recently, two 2017 papers in Economic Inquiry analyze the data from different angles: “Inequality and Growth in the United States: Why Physical and Human Capital Matter,” and “Estimating the Level and Distribution of Global Wealth, 2000-2014.”

A 2017 paper in the Journal of Personality and Social Psychology found people are happier when they live in more equal countries.

Journalist’s Resource has profiled related research on labor unions, the relationship between Medicaid and Medicare and income inequality, the role of globalization, income inequality in China, and debates over how a universal basic income could be either an efficient equalizer or a waste of cash.

Last updated: September 6, 2017

 

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Citation: McCall, Leslie; et al. “Exposure to Rising Inequality Shapes Americans’ Opportunity Beliefs and Policy Support.” Proceedings of the National Academy of Sciences, 2017. DOI: 10.1073/pnas.1706253114.