A demonstration in Washington in January 2012 connected to the Occupy Wall Street protest.CreditDoug Mills/The New York Times
On July 24, 2014, Edurado Porter writes in The New York Times:
Why don’t governments in democratic societies do more to combat income inequality?
Scholars have grappled with this question for years. The median voter theory, a longstanding workhorse of political science, predicts that politicians hoping to get elected will seek to close a growing income gap to woo the big bulk of voters in the middle who feel left behind by the fortunate few.
Yet elegant as it is, this idea doesn’t quite mesh with reality. Researchreveals little connection between the income gaps in any given country and its government’s effort to close it by taxing the rich to spend on the poor.
There are good reasons why not. The poor vote less than the rich, reducing their electoral clout. And they don’t vote exclusively on the basis of their economic self-interest, but are often swayed by noneconomic issues, like abortion, the environment or gun control.
What’s more, the rich might simply buy political power and use it to maintain their privilege. The political scientist Larry Bartels hasdocumented that the rich have about three times as much influence as the poor on votes in the United States Senate.
Researchers at the University of Hannover in Germany propose a simpler reason: Voters don’t demand more redistribution because they don’t grasp how deep inequality is.
Using data from the International Social Survey Programme, in which respondents were asked to locate their relative income status on a scale of 1 to 10, Carina Engelhardt and Andreas Wagener built a measure of perceived inequality, defined as the gap between the median income, smack in the middle of the distribution, and the average income of the population.
Evidently, nobody has a clue: In every one of the 26 nations, most of them in the developed world, for which they collected data, people believe that the income gap is smaller than it really is. And using perceived rather than actual inequality, the median voter theory works much better: Where people believe inequality is worse, governments tend to redistribute more.
“If citizen-voters see an issue, politics has to respond – even if there is no issue,” they concluded. “Conversely, if a real problem is not salient with voters, it will probably not be pursued forcefully.”
This could go some distance toward explaining the American experience. People in the United States not only tolerate one of the widest income gapsin the developed world, but its government also ranks among the stingiestin terms of efforts at redressing the imbalance.
Unsurprisingly, Americans suffer from a pretty big perception gap. They think an American in the middle of the income distribution makes only 4 percent less than the national average, according to Ms. Engelhardt and Mr. Wagener’s research. In truth, the American in the middle makes 16 percent less.
Misjudgments in Inequality
Inequality of income is underestimated everywhere.
Much is made of Americans’ particular ideological bent. Many, rich and poor, distrust government. They support free-market capitalism and tend to view the distribution of the nation’s economic fruits as roughly fair.
Would Americans demand more Robin Hood policies if they understood the depth of inequity? Research by economists at Harvard and the Universidad Nacional de Las Plata in Argentina found that Argentines who had overestimated their rank on the national income scale demanded more redistribution when they were confronted with the truth.
When Dan Ariely of Duke and Michael Norton of Harvard Business School asked an online panel to build a “Better America,” respondents proposed ideal distributions of wealth that were much more equitable than what they thought was reality.
And, of course, reality is much more unequal than they thought.
