Why Doesn't Concern Over Income Inequality Translate Into Support for Redistributive Policies?

Attitudes about inequality in the US present a puzzle for economists: according to some figures, three-quarters of Americans believe inequality has increased over the last twenty years, a trend that the majority consider a “bad thing.” Yet over the same period, Americans have also become less supportive of government efforts to redistribute from high- to low-income households. In an April 2013 New York Times article, economists Ilyana Kuziemko and Stephanie Stantcheva suggested a possible reason for this paradox.

According to an experiment conducted by Ilyana Kuziemko (Columbia University), Michael I. Norton (Harvard Business School), Emmanuel Saez (University of California, Berkeley), and Stefanie Stantcheva (MIT), "the more people focus on inequality, the less they trust the government."

The researchers surveyed 5,000 Americans online, half of whom were randomly assigned to complete an online, ten-minute tutorial about the increase in income inequality over the last decades. The tutorial was interactive: "When respondents entered their current household income, the interface calculated a painful counterfactual: what their income would have been had economic growth since 1980 been equally shared among all American households. In addition, the tutorial emphasized the role that public policy could play in reducing inequality, presenting charts showing that, historically, periods with higher top tax rates have not necessarily been periods of low economic growth. If lack of knowledge is responsible for lack of support for redistribution, our tutorial should have had a meaningful effect on respondents’ policy preferences."

The results (discussed in the working paper, "How Elastic Are Preferences For Redistribution? Evidence From Randomized Survey Experiments") showed that the tutorial raised the share of respondents who indicated that inequality was a “very serious problem” by over 40 percent, but "had only a small effect on support for increasing taxes on millionaires and raising the minimum wage, and no effect on support for other policies that help low-income families, like the earned-income tax credit and food stamps." Those who saw the tutorial were also 20 percent less likely to agree that government could be trusted at least “some of the time.” This suggests that by showing respondents the level and growth of income inequality, the tutorial also undercut respondents' trust in government’s ability to fix the problem.

The researchers concluded: "Our research suggests that merely talking more about inequality is unlikely to change Americans’ policy preferences. Americans are already aware of inequality and are troubled by it. Proponents of greater redistribution can probably save their breath pointing out that inequality is a problem. Instead, they face what seems to be a much more difficult task: convincing them that their government is up to the task of addressing it."

http://opinionator.blogs.nytimes.com/2013/04/21/our-feelings-about-inequality-its-complicated/

http://economics.mit.edu/files/8808

https://hbs.qualtrics.com/SE/?SID=SV_77fSvTy12ZSBihn

http://elsa.berkeley.edu/~saez/kuziemko-norton-saez-stantchevaNBER13.pdf

TeachingWithData.org resources:

Income Inequality in the US (http://www.teachingwithdata.org/resource/3182)

An Analysis of Earnings (http://www.teachingwithdata.org/resource/3159)

NYT Interactive: What Percent Are You? (http://www.teachingwithdata.org/resource/3913)

Recession Trends (http://www.teachingwithdata.org/resource/3067)