The Two Step Inequality Problem

An interesting experiment recently showed that we have a two step inequality problem. First, many underestimate the extent and growth of inequality in the US over the past few decades. Showing them information and charts about these trends and where their hypothetical incomes would fall in a world with less inequality helps raise awareness and concern. However, there is a second problem – raising concern about inequality is offset by a different concern, that the government isn’t up to the task of dealing with problems.

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.

 

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About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar. http://faculty.chicagobooth.edu/owen.zidar/index.html
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One Response to The Two Step Inequality Problem

  1. mike shupp says:

    I’ve never run into anyone who doubted that the federal government could change income distribution levels. I’m 66 — perhaps I haven’t lived long enough and met enough people. I have met people cynical about the motives of people in government or skeptical of the effectiveness of many government programs, and I certainly can accept that exposure to unpleasant statistics about inequality can deepen that cynicism. But that’s basically a side topic. The real issue is that while some Americans think government should act deliberately to lessen inequality, they are greatly outnumbered by people who think such action absolutely evil. Libertarians, for examlple.

    You might wish to counter that most Americans actually do gratefully accept measures such as increasing social security benefits which have the effect of lessening inequality, and I’d cheerfully agree. But from observation, the people who gain these increased benefits see this as improved “fairness”, rather than the effects of tax and redistributive policy. Their fellow citizens have morally improved, and thus retiree’s incomes magically increase, without any change at all in government policy!

    I concede the reasoning is illogical. I suggest many people hold to it, providing a better explanation of how Americans can wish for improved equality while opposing government action which might produce such a result.

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