Attitudes Toward Inequality

February 19th, 2011 by Brad

I’ve been thinking a lot recently about American attitudes toward income inequality and related issues and how these attitudes relate to the moral foundations. Levels of inequality have risen in recent years to rival those seen in the Gilded Age (the years immediately preceding the Great Depression). Changes in government policy have a significant bearing on the accelerating pace of inequality. The figure below (borrowed from this site) shows how the gap between those in the top and bottom quintiles of income grown over the last 40 years. If we were to include non-income wealth (property, investments, etc.), the gap would be substantially wider.

Source: U.S. Census Bureau, Historical Income Tables—Households, Table H-3, Mean Household Income Received by Each Fifth and Top 5 Percent All Races: 1967 to 2006 (2006 Dollars)

Fortunately, the Knowledge Networks panel study (referred to elsewhere) included an item asking individuals what they felt should be done about the gap. After describing the size of the difference between the top earners and those on the bottom, respondents were asked, “Should this difference be smaller, bigger, or about what it is now?” For the purposes of the analysis that follows, I combined the few respondents that indicated the gap should be bigger (only about 5 percent of the sample) with those who said it should remain the same (about 30 percent).

I ran a statistical model* that predicts the probability that an individual would say that the gap should be smaller (without any specifics about how this would be accomplished, but more on that later). Even after controlling for ideology and party identification, three of the moral foundations are statistically significant and substantively important to the probability of acknowledging the gap as a problem. Increasing the two liberal foundations (Harm/Care and Fairness/Reciprocity) increases the probability of wanting to narrow the gap. Increasing the Ingroup/Loyalty foundation decreases the probability. The effects are shown in the Figure below.

In each panel, I’ve graphed the effect of moving across the range of each foundation on the likelihood of saying that the gap between the rich and poor should be smaller for a hypothetical individual who is a moderate Democrat (in Blue) or Republican (in Red) with income in the $50,000-$85,000 range who has average scores on all of the other moral foundations scores. Within each panel, the individuals are similar in every regard except for their party identification. The figure reveals a persistent partisan gap even after controlling for the moral foundations and ideology, but the gap between partisans with the same scores on the moral foundations is nowhere so large as the gap within each party across the ranges of the foundations listed above. The Authority and Purity foundations were not significantly related to attitudes about the income gap.

We know, however, that the foundations tend to move together (see this discussion for an example). Individuals who score high on Harm also tend to score high on Fairness. The figures above are interesting, but in some ways the “all else equal” assumption that they impose on the relationship between attitudes and the moral foundations is not as straightforward as the clean looking lines suggest. In the table below, I show some more probable combinations of scores. The entries in the table show the predicted change in probability from the baseline case described above. The changes in the foundations are modest (a one point increase or decrease from the baseline case described above for the “high” and “low” figures respectively).

Predicted change in probability

Democrat

Republican

High Harm, High Fairness

+12.3 +15.7

Low Harm, Low Fairness

-16.3 -17.2
Low Harm, Low Fairness, High Ingroup -26.9 -26.9

So far, we have seen how increases in the Harm/Care and Fairness/Reciprocity foundations serve to increase concern about income inequality, while the Ingroup/Loyalty foundation decreases concern. That the liberal foundations should increase the likelihood of considering large disparities in income is not especially surprising in itself. However, I was surprised that the effects of the moral foundation scores are substantially larger than partisanship and ideology (the prime movers in most political science literature). Earlier work done by Felicia Pratto and her colleagues on the relationship between social dominance orientation and merit-based versus needs-based allocation of resources (see this JSTOR link for more) suggests why these particular foundations might be important (maybe the psychologists can back me up on this…).

Understanding the factors that lead to one acknowledging that income inequality is a problem that should be solved is only part of the bigger question. A much stickier issue is determining a politically feasible way of narrowing that gap. The recent debate over extending the Bush tax cuts illustrates the powerful emotions and interests that are mobilized when real money is on the table. Both sides, it seems to me, attempt to frame the issue as one of harm and fairness. The right argues that tax raises on the wealthy unjustly punish success. The left argues that it is only fair that those who have benefited so much from the system established by government should pay a little more to support it and those who are hurt by it.

The same Knowledge Networks data included an attitude item asking whether the respondent would support raising taxes on those who make more than $200,000 a year. About half of the sample indicated that they would support raising taxes on the wealthy.

The most powerful relationship that emerged between attitudes about taxes and the moral foundations (indeed the only significant relationship) was found in the Harm/Care foundation. The figure below shows this relationship over the range of the Harm foundation. Even after controlling for party identification and ideological self-placement, income, and the other foundations, the tax issue emerged as an issue of caring rather than equity or fairness.

The figure below shows a partisan differential that persists even after controlling for all of the above factors. However the difference between partisans is nowhere as large as the difference between individuals who score highly on the Harm/Care foundation and those who have low score on that foundation.

The Harm/Care foundation appears to be a more important factor in determining one’s support for raising taxes on the wealthy than party identification or ideological self-placement. Indeed, as the figure shows, a Republican who scores highly on the Harm foundation has a higher probability of supporting taxes on the wealthy than a similarly situated Democrat with a low score.

Several interesting questions are suggested by this brief exploration of the relatively limited selection of items touching on income inequality available to us in this dataset. First, what role does issue framing play in activating certain moral considerations over others? Would the conservative frame described briefly above change the relationship between the Harm foundation and attitudes about taxes? What about the liberal frame? This should be easy enough to test once we identify the relevant frames.

Second, how do the moral foundations relate to other potential remedies for economic inequality. The range of policy options is wide, and, depending on the moral prism through which one looks at them, reactions are sure to vary. Estate taxes, minimum wage laws, maximum wage laws, changes to the tax code, and repealing the sales tax on food and other necessities all might be met with different reactions from individuals with who emphasize different moral foundations. This would be a little trickier to test as it would require coming up with neutral descriptions of fairly complex and unfamiliar policies.

Finally, how much does where you stand on the issues of economic inequality depend on where you sit in the relative distribution of wealth? Psychologists don’t seem to talk much about social class and other kinds of vulgar economic considerations, but they surely play a role. The poor and the rich probably diverge in their attitudes about redistributory policies for reasons quite apart from their morality. This might be the most difficult problem to address from the researcher’s standpoint, as it would require collecting data from a broad enough cross-section of the income distribution. We survey researchers generally have the most success in the middle of the distribution with response rates falling off rapidly toward either extreme.

*I ran a logit regression with controls for Democratic party affiliation, Liberal political identification, income terciles, and the moral foundations scores.

Posted in differences between republicans and democrats, moral foundations, moral psychology, political psychology, unpublished results, yourmorals.org4 Comments »
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4 Responses to “Attitudes Toward Inequality”

  1. Ravi Iyer says:

    Very well done, Brad! If I remember correctly, we’ve actually tried some of the framing experiments you suggest above, but I believe the effects are often overwhelmed by partisanship. I might ask Jesse for details. My personal interest would be to explore the idea of positional vs. absolute wealth and the psychology of who cares more about which type of wealth.

  2. Jason Russell says:

    In “The Tipping Point” Malcolm Gladwell explains that fixing broken windows in neighborhoods, cleaning graffiti from subway cars, and arresting fare jumpers can result in a dramatic decrease in more serious crimes. I believe Professor Haidt and the rest of the crew at YourMorals, and CivilPolitics are fixing a lot of broken windows in the neighborhood of how we relate to each other on social and political issues. I’m a fan. I wish all of you success in your efforts.

    With that said, I think this piece on Income Inequality is interesting, coming on the heels of Professor Haidt’s Post Partisan presentation.

    One form of bias is topic selection. Another form is how the topic is represented.

    It seems to me that equality in the social justice sense, and the opposition of perceived inequality, is one of liberalism’s sacred beliefs. The household income chart and supporting words at the opening of this blog piece appear to reflect and support this belief.

    But even if I’m wrong about that, there’s still strong evidence that the graph of income inequality and the blog words that describe it tell only part of the story, and thus misrepresent it. And if that’s true, then how meaningful is the analysis of the survey results?

    I’m not a social scientist. I’m not an economist. I’m not a statistician. (I took statistics in college because it was required for my degree in mechanical engineering. I learned about Monte Carlo analysis as part of my job in analyzing schedules for government acquisition programs. That’s the full extent of my understanding of statistics. ) I’m just a guy whose interests include reading about the origins and history of the ideas behind politics. I may be wrong about some or all of what I present here. My logic may be seriously flawed. I may be seeing the speck in the eye of liberalism and ignoring the log in my own. But for better or for worse, this is how my brain connects the dots, and on the off chance that even this blind squirrel might find a nut or two, I offer my two cents.

    I believe the following information is relevant to the topic of household income inequality and its relation to moral foundations. I believe that if this information had been included in the description of income inequality that was provided to the survey respondents it might have influence their answers, and in turn might influence the analysis of those answers from the perspective of moral foundations:

    1) Throughout my entire working life – from hourly minimum wage jobs to principal engineer – I can’t remember an annual salary increase of more than 5 percent. The only times my salary increased more than that was when I switched employers. I know this is only anecdotal evidence, but I suspect my experience is closer to the rule than to the exception.

    The income gap between a person who makes, say $100,000 and a person who makes $40,000 is $60,000. If they both stay with their current employer and get a 5% annual raise, their new salaries will be $105,000 and $42,000, and the gap between them will widen to $63,000. “Income inequality” will increase by $3,000. This is perfectly normal. OF COURSE the gap between the top and bottom 20% will constantly widen. A REAL problem would exist if that DID NOT happen. To suggest otherwise is to misrepresent reality.

    2) Most people in the bottom bracket don’t stay there, they move up. Many of them move to the very top bracket. “Most income statistics present a snapshot picture as of a given moment – and their results are radically different from those statistics which follow the same given individual over a period of years. For example, three-quarters of those Americans whose incomes were in the bottom 20 percent in 1975 were also in the top 40 percent at some point in the next 16 years. … That makes it completely misleading to say, for example, that “people making minimum wages have waited ten long years for a raise,” because these are not the same people making the same wages for ten years, even when the minimum wage level has not been changed in a decade. Far from being an enduring class, most Americans in the bottom 10 or 20 percent of income-earners are transients in those brackets – as are people in other income brackets.” (Thomas Sowell, “Economic Facts and Fallacies,” p. 136.) “A major study at the University of Michigan has followed the same individuals – tens of thousands of them – over a period of decades. Among individuals who are actively in the labor force, only 5 percent of those who were in the bottom 20 percent in income in 1975 were still there in 1991, compared to 29 percent of those in the bottom quintile in 1975 who had risen to the top quintile by 1991.” (Sowell, p. 145.)

    Did the survey respondents know this? Would this information have influenced how they responded? Since most people in the bottom don’t stay there but instead move to brackets above there, why is “income inequality” even seen as a problem? Why was the question even asked?

    3) “The top 20 percent of households have four times as many workers as the bottom 20 percent, and more than five times as many full-time, year-round workers.” (Sowell, page 128.) “The poorest fifth of households contain 25 million fewer people than the fifth with the highest incomes.” (Sowell, p. 127.)

    Is it any wonder then, that the top 20 percent of households make more money than the bottom 20 percent by a wide margin? And wouldn’t that compound the widening effect discussed in item 1 above? Based on this information, the income gap for individuals should be much narrower than that for households. Would the survey respondents have answered the way they did if they were shown a much narrower gap, and/or all of the reasons for it were explained?

    4) “While nearly 60 percent of Americans in the top 20 percent graduated from college, only 6 percent of those in the bottom 20 percent did.” (Sowell, p. 128.) It is only natural that the more educated, on average, earn more. Was this part of the description of the income gap that was provided to the respondents?

    5) The link to the source for the graph in the blog piece did not work when I tried it, so I wasn’t able to find out if there are any caveats associated with it. But… “Most statistics on income inequality are very misleading in yet another way. These statistics almost invariably leave out money received as transfers from the government in various programs for low-income people which provide benefits of substantial value for which the recipients pay nothing. Since people in the bottom 20 percent of income receive more than two-thirds of their income from transfer payments, leaving those cash payments out of the statistics greatly exaggerates their poverty – and leaving out in-kind transfers as well, such as subsidized housing, distorts their situation even more. In 2001, for example, cash and in-kind transfers together accounted for 77.8 percent of the economic resources of people in the bottom 20 percent. In other words, the alarming statistics on their incomes soften cited in the media and by politicians count only 22 percent of the actual economic resources at their disposal.” (Sowell, p. 128.)

    If cash and in-kind transfer payments were not included in the calculation of the income gap that was described to the survey respondents, wouldn’t that misrepresent the gap as being wider than it actually is?

    6) Speaking of the graph, I wonder if the survey responses would have been the same if the respondents had been shown a graph which shows the data in a less dramatic way, like this one:

    US Income Inequality 1967-2003 relative to median (log scale).
    http://en.wikipedia.org/wiki/File:US_Income_Inequality_1967-2003_relative_to_median_(log_scale).svg

    7) I presume the numbers in the graph in the blog piece are adjusted for inflation? They typically are, but if not, then the gap is likely exaggerated.

    8) Measurements of household income say nothing about the material possessions of the people at the bottom and the improvements to quality of life those possessions bring. “By 2001 most people defined as poor had possessions once considered part of a middle class lifestyle. Three-quarters of them had air conditioning, which only a third of all Americans had in 1971. Ninety-seven percent had color television, which less than half of all Americans had in 1971. Seventy-three percent owned a microwave, which less than one percent of Americans owned in 1971, and 98 percent of “the poor” had either a videocassette recorder or a DVD player, which no one had in 1971. In addition, 72 percent of “the poor” owned a car or truck. Yet the rhetoric of the “haves” and the “have nots” continues, even in a society where it might be more accurate to refer to the “haves” and the “have lots.” (Sowell, p. 129.)

    Of course, some of what is described in this quote is attributable to technological advancements. DVD players had not been invented in 1971. But still, it is undeniable that the people in the bottom 20 percent have more possessions which tend to improve quality of life now than they did in 1971. Income inequality tells only part of the story about the differences between the top and bottom 20 percent of society; quite possibly an exaggerated one.

    9) Another part of the story not told by income inequality is outgo inequality. People who make more also pay proportionally much more in taxes. “The wealthiest 1 percent of the population earn 19 percent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile the bottom 50 percent – those below the median income level – now earn 13 percent of the income but pay just 3 percent of the taxes.” ( http://www.american.com/archive/2007/november-december-magazine-contents/guess-who-really-pays-the-taxes )

    In the calendar year 2004, the bottom 20 percent of households paid about $1,684 in taxes, but received $24,860 in federal government spending. In other words, they received more than they contributed by a factor of almost 15. The second 20 percent paid $6,644 and received $19,889. They received more than they paid by a factor of three. The third 20 percent paid $13, 028 and received $16,781, also receiving more than they paid. The fourth 20 percent received less government spending than it paid in to the system, by a margin of $22,719 to $15,502. They paid about 1.5 times what they got back. The top 40 percent pay more than they get back. Everyone else gets a return on their “investment.” The top 20 percent paid $57,512 and received $18,573. They paid over three times what they got back. (From a chart, here: http://www.taxfoundation.org/files/sr151.pdf )

    People whose earned income is in the top half of all brackets pay virtually the entire tax burden of the United States. Much of what the top half pays is redistributed to those in the bottom half but not counted as part of the bottom half’s income (see item 5 above). The people in the lower half are essentially free riders.

    I wonder if the survey respondents would have answered the way they did if the entire picture of the differences between the top and bottom 20 percent of people in terms of income and outgo had been part of the description of income they received before taking the survey.

    Some Observations:

    a) Let’s say that income inequality is indeed a “problem” that has to be fixed. How would we do that? Cap salaries? Mandate smaller raises for those at the top to avoid the phenomenon described in item 1 above? Redistribute even more wealth? The blog piece says “The left argues that it is only fair that those who have benefited so much from the system established by government should pay a little more to support it and those who are hurt by it.” The blog piece also says “The same Knowledge Networks data included an attitude item asking whether the respondent would support raising taxes on those who make more than $200,000 a year. About half of the sample indicated that they would support raising taxes on the wealthy.” Would the answer have been the same if the respondents were first told how much the wealthy already pay?

    As discussed above, the top half of the country already carries the bottom half, and the top 10 percent pays 68 percent of the total tax revenue collected by the government. Are those who think the top earners should “pay a little more” even aware that top earners already pay a LOT more? And if they do know, how much more do they want? Should the top 10 percent pay 80 percent of the total tax revenue collected by the government instead of “only” 68 percent? Should they pay ninety percent? How much is enough? How much more do the people at the top have to pay before the left stops asking for “a little more?”

    Instead of roughly a 50/50 split between payers and free riders, would the left prefer that it be 40/60? Would that be enough? Or would a 30/70 ratio be preferred? As it is, the top 20 percent pay over three times what they get back in federal benefits. How much is enough? Four times? Five? Where does it end?

    The point of all this is to raise this question: Is the left’s argument an example of the Open-Ended Fallacy, which Sowell describes in the first chapter of Economic Facts and Fallacies. (By the way, it’s not just because Sowell makes several salient points that I quote him extensively in this comment. It’s also because he is on the recommended reading list under “Moral Psychology” on civilpolitics.org and seems to have gained some respect here. ) Sowell says, “No matter how much is done to promote health, more could be done. No matter how safe things have been made, they could be made safer. And no matter how much open space there is, there could still be more. Obvious as this may seem, there are advocates, movements, laws, and policies promoting an open-ended commitment to more of each of these things, without any indication of a limit, or any particular principle by which a limit might be set, much less any consideration of alternative uses of the resources that some people want devoted to whatever desirable thing they are prompting.”

    b) It has been my observation over the years of reading, watching, and participating in discussions about politics that liberals tend to look at the big picture of human interaction through a straw. For example, they tend to see income inequality out of context from the factors listed above. It seems to me that liberals tend to zero in on individual statements, issues, or beliefs out of context from the whole of society (like income inequality, or religion, or authority/respect, or purity/sanctity) but fail to see the role those things play within the larger fabric. This tendency seems a little like the Fallacy of Composition Sowell describes in his book: the belief that what is true of a part is true of a whole. “Many economic policies involve the fallacy of composition, as politicians come to the aid of some group, industry, state or other special interest, representing the benefits to them as if they were net benefits to society, rather than essentially robbing Peter to pay Paul.” (Sowell, p. 7) It seems to me that liberals tend to consider only what is seen – like supposed income inequality – and not what is not seen – like the numbered items above (see Frederic Bastiat’s, “That Which is Seen and That Which is Not Seen.)

    c) Could it be that the liberal view of income inequality is a variation of what Professor Haidt described in his Post-Partisan presentation when he said, “When we find any job in the nation in which women or minorities are underrepresented by a factor of three or four, we make the strong presumption that this constitutes evidence of discrimination. And if we can’t find evidence of overt discrimination, we presume that there must be a hostile climate that discourages underrepresented groups from entering?”

    If taken into account and understood as parts of the whole, the numbered items above might decrease the calculated size of the gap, influence the survey respondents’ interpretation of it, or both. If the whole picture of household inequality, and not just the parts that illustrate and support liberal sacred beliefs, was described or otherwise known to the survey respondents then I wonder if the survey results would have been different, and I wonder if the moral foundations analysis would have uncovered the same, or different, insights.

    From the perspective of the numbered items above, the fact that income inequality was chosen as a blog topic, along with the way it was represented statistically and in words, the blog piece begins to seem more like a self-fulfilling prophecy of a liberal sacred belief than a realistic representation of an economic phenomenon, and thus it seems to be aimed more at advancing the liberal agenda than at understanding the relationship between moral foundations and the political divide.

    If any of my three observations about liberals are even partially correct, what role do moral foundations play in explaining them?

    I wonder, if there were more conservatives within the field of social psychology would the field be asking more, or different, questions and as a result doing different sorts of analyses about the relationship between moral foundations and politics.

  3. Brad says:

    Jason, thank you very much for your thoughtful reply. Let me briefly respond to a few of the points you raise.

    I’ll try to address them point by point.

    1) Too me, this point further underscores the problem with income inequality. It naturally grows over time.

    2) Respondents were only given information about the current position of the top 20% of earners and the bottom 20%. The full text of the question reads, “The American households with incomes in the top 20% earn an average of $170,000 per year, and households with incomes in the bottom 20% earn an average of less than $11,000 per year. Should this difference be smaller, bigger, or about what it is now?” The only information that respondents had when they responded to the question was what they had before they took the survey. I think it would be fascinating to investigate how framing the issue differently would change patterns of response.
    I haven’t read Sowell, and I would be interested to know how these inequality statistics would change if we were to adjust for natural life-cycle changes over time (we should expect the bottom fifth to be overpopulated with younger people who will eventually migrate to other parts of the income distribution, and similarly the top fifth is surely overpopulated with established individuals at the peaks of their careers).

    Many people who have studied the issue much more extensively than you or I have concluded that income inequality is real and rising. I imagine that Sowell might well challenge their findings, but my reading of the literature is that growing inequality is a real phenomenon (I almost wrote “problem,” but I suppose it is not universally perceived as such).

    3) Again, my economic illiteracy is probably shining through, but this does not immediately jump out as a strong critique. It would be if it were also the case that household sat the top and bottom of the distribution were the same size. This would mean that the per capita income figures would show a smaller gap. However, if it is the case that households at the bottom of the distribution are simply unable to find as many full-time, year-round jobs as those at the top, we have a situation where those at the bottom of the distribution make less and are less able to find gainful employment. This is an empirical question.

    4) It is indeed only natural that the more educated earn more. This again does not solve the underlying problem if those at the bottom 20% are not in a position to attend college themselves or send their children.

    5) My apologies for the graph. I probably should have made sure that the link worked. It was compiled from Census data. Again, this is an empirical question and I grant that this could very well decrease the gap when accounted for.

    6) Again, there are a number of ways to present these data, showing the ratio to the median income on a log scale doesn’t seem particularly intuitive to me, but it very well could affect the way that individuals perceive the “problem.”

    7) The numbers are adjusted for inflation (specifically, they are in 2006 dollars)

    8) I agree that the absolute quality of life has increased over time. While we are talking about possessions, not accounting for accumulated wealth vastly understates the actual gap as those at the bottom have very little else of any real value, and those at the top of the distribution build equity in real property and other holdings in addition to their higher incomes.

    9) You are right that the wealthy generally pay more as a percentage of their income and certainly more in real terms than the poor. Some might argue that those at the top owe a peculiar debt to the society that has created the conditions in which they have been able to become so comfortable.

    With respect to your three observations:

    a) I think I am in agreement with you – this is a difficult question and there are no easy solutions. For good or ill, our particular economic system and the accompanying set of norms and institutions required to sustain it are so deeply ingrained in our politics and our national psyche that it is difficult to imagine changing any of them in any major way.
    As I see it, income inequality in the United States is a problem and there are steps that we can take to address it. After reading through your comments and the points that you raise, I am reconsidering how large the gap actually is, but I am convinced that it remains.

    b) You’ve certainly given me a lot to chew on, and I will consider it. I might point out that conservatives tend to make the same kinds of composition fallacies in their narratives (e.g. the Cadillac-driving welfare queens or any of the other caricatures of the “undeserving” poor that are bandied about by some).

    c) It certainly is possible that liberals are deluded when they interpret the gap between the rich and poor as a problem in need of solving. I would suggest that it is at least equally plausible that conservatives have deluded themselves into thinking that the invisible hand will always serve us well.

    I am convinced that no one scholar (liberal or conservative) can have a complete understanding of the causes and consequences of something as complicated as the distribution of income in the largest economy in the world.

    Hopefully I won’t do too much violence to your blind-squirrel metaphor by proposing an extension. Perhaps, liberals are the blind squirrels and conservatives are deaf. Alone, neither would survive long, but working together we can accomplish more than we ever could apart.

    Thank you again for your comments!

  4. Jason Russell says:

    Brad,

    I appreciate your points about income inequality, and I’m sure we could discuss that topic further, but I think to do so would miss the larger point of my original comment.

    My larger point was to support Professor Haidt’s suggestion at the end of his Post-Partisan presentation through some examples of how a person from outside the Tribal Moral Community (TMC) of social psychology views the topic, and through those examples suggest that if social psychology were to include a few more non-liberals then maybe the discipline would ask some different questions – or at least frame the current ones differently – which in turn could possibly lead to some fresh insights.

    Jason

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