Does Inequality Make People Concerned about Inequality?

Income inequality has risen to prominence as one of the central political issues of our time. Since the Great Recession, protests linked to the Occupy movement have occurred in many different countries around the world, often under slogans such as “We are the 99%”. A recent survey by the World Economic Forum of 700 elite decision-makers identified “Severe income disparity” as the 4th most concerning global risk in 2014. And 68% of investors responding to a recent Bloomberg Global Poll said that governments should confront the problem of income inequality. Christine Lagarde, managing director of the International Monetary Fund, reiterated these concerns when she spoke to the Financial Times early last year.

A further indication of the prominence of inequality as a political issue is the considerable popularity that books about the subject have enjoyed. Examples include: The Conscience of a Liberal by Paul Krugman; The Spirit Level by Richard Wilkinson and Kate Pickett; The Price of Inequality by Joseph Stiglitz; and most recently, Capital in the Twenty-First Century by Thomas Piketty. Indeed, the latter book rocketed to the number one spot in Amazon’s list of best-sellers shortly after being released in the United States.

There is of course substantial variation in income inequality across countries. Using data from recent Pew surveys, this post investigates whether measured inequality is correlated with citizens’ concern about inequality. In the first survey, Pew asked respondents in 44 countries, “Do you think the gap between the rich and poor is a very big problem, a moderately big problem, a small problem, or not a problem at all in our country?” Here I measure concern about inequality as the weighted average percentage of respondents who think inequality is a problem, assigning ‘3’ to answers of “a very big problem”, ‘2’ to answers of “a moderately big problem”, and ‘1’ to answers of “a small problem”. In the second survey, Pew asked respondents in the same 44 countries, “Which one of these poses the greatest threat to the world? Nuclear weapons; Inequality; Religious & ethnic hatred; Pollution & environment; AIDS & other diseases.” Here I measure concern about inequality simply as the percentage of respondents who view inequality as the top global threat. All values are for the year 2014.

I utilise two alternative measures of income inequality: the Gini index reported by the World Bank in the latest available year (n/a for Palestine, Lebanon and South Korea); and the Gini index reported by the CIA in the latest available year (n/a for Palestine and Lebanon). These two measures are strongly but not perfectly correlated; r = .90 (p < 0.001, n = 41). Note that p-values correspond to unrounded values of r.

The first chart (below) plots the relationship between the weighted average concern about inequality and the World Bank estimate of the Gini index. The second plots the relationship between the weighted average concern about inequality and the CIA estimate of the Gini index. Though both relationships are positive, neither is statistically significant. In the first case, r = .26 (p = 0.106, n = 41), while in the second, r = .16 (p = 0.324, n = 42). Elsewhere, I have noted that the relationship is similarly weak among OECD countries; and that, in contrast, a clear positive association obtains between measured unemployment and concern about unemployment.

Fig1

Fig2

The third chart (below) plots the relationship between the percentage who believe inequality is the top global threat and the World Bank estimate of the Gini index. The fourth plots the relationship between the percentage who believe inequality is the top global threat and the CIA estimate of the Gini index. Here both relationships are negative, and one reaches significance at the 5% level. In the first case, r = –.18 (p = 0.249, n = 41), while in the second, r = –.31 (p = 0.045, n = 42). Incidentally, the correlation between the two measures of concern about inequality is positive but barely significant, namely r = .26 (p = 0.094, n = 44).

Fig3

Fig4

In a highly cited 2001 paper, Alberto Alesina, Ed Glaeser and Bruce Sacerdote argue that one of the reasons why welfare spending is lower in the US than in Europe is that Americans are more likely to believe that income is determined by individual effort as opposed to luck. Using data from a third recent Pew survey, I examine whether the belief that individual effort determines income is correlated with citizens’ concern about inequality. In the third survey, Pew asked respondents, “Which is the most important reason for the gap between the rich and poor in our country today? Our govt’s economic policies; Workers’ pay; Our educational system; Some work harder than others; Trade between countries; Our tax system.” I measure the belief that individual effort determines income as the percentage who answered “Some work harder than others”.

The fifth chart (below) plots the relationship between the weighted average concern about inequality and the percentage who believe the most important reason for the income gap is that some work harder than others. The six plots the relationship between the percentage who believe inequality is the top global threat and the percentage who believe the most important reason for the income gap is that some work harder than others. Both relationships are negative and significant at the 10% level or lower. In the first case, r = –.33 (p = 0.027, n = 44), while in the second, r = –.28 (p = 0.068, n = 44). When the sample is restricted to OECD countries, the relationships are stronger, but the latter no longer reaches significance: r = –.69 (p = 0.006, n = 14), and r = –.32 (p = 0.269, n = 14).

Fig5

Fig6

Overall, this analysis has found only weak evidence that measured inequality is correlated with citizens’ concern about inequality. It has also found preliminary evidence that citizens’ concern about inequality is correlated with the belief that individual effort determines income. Note that the negative correlation observed in the third and fourth charts should not be taken to imply that greater inequality somehow makes people less concerned about inequality. Rather, it probably arises because countries with high inequality often face other problems (such as pollution or disease epidemics), which citizens may consider more pressing. As additional data become available, it will be interesting to see whether a stronger relationship emerges between measured inequality and citizens’ concern about inequality.

References:

Alesina, A. Glaeser, E. & Sacerdote, B. (2001). Why doesn’t the US have a European-style welfare system? Brookings Papers on Economic Activity, 2, 187-254.

Krugman, P. (2009). The Conscience of a Liberal. New York, NY: W.W. Norton & Company.

Piketty, T. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press.

Stiglitz, J. (2013). The Price of Inequality. London, UK: Penguin.

Wilkinson, R. & Pickett, K. (2010). The Spirit Level: Why Equality is Better for Everyone. London, UK: Penguin.


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Noah Carl

About Noah Carl

Noah is a doctoral candidate in Sociology at the University of Oxford. He was born and grew up in Cambridge, England. He received a BA in Human Sciences and an MSc in Sociology from the University of Oxford. His research focuses on the correlates of beliefs and attitudes.

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