Wednesday, May 20, 2015

Most theories about political effects of inequality need to be either abandoned or reframed as theories about the effects of perceived inequality

I have argued for a good while that concern about income inequality, while possibly reflecting noble sentiments, has had no real evidentiary basis. Not that there is no income inequality but rather that we are still in the early cognitive stages of even understanding what we are talking about in terms of concepts, measurements, causation, etc. regarding an extremely complex issue.

I have also argued that most of the pundit talk on income inequality is simply political haranguing. Any cudgel in the fight.

Here is further evidence supporting that position. From Misperceiving Inequality by Vladimir Gimpelson and Daniel Treisman. The abstract:
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.
I believe Dan Gardner might have a chapter on this issue in his Future Babble. I know someone has written this up in book form.
From the paper itself:
And the difficulty of measuring the actual income distribution does not affect our second point: that perceptions of inequality — whether or not they are accurate — do correlate with political preferences.

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