Social Mobility and the Demand for Redistribution: The POUM Hypothesis

Inequality and happiness: Insights from Latin America

“…2 Blanchflower and Oswald [5] get a correlation coefficient of 0.56 for British data for 1975-1992 where both questions are available; Graham and Pettinato [17] get a correlation coefficient of 0.5 for Latin American data for 2000-2001, in which alternative phrasing was used in different years. 3 For example, for a lognormal distribution (often used to model income/wealth distributions) based on a normal distribution N(m,' 2 ), the mean is e "þ' 2 =2 and the median is e " .Since the mean is conditional on the variance but the median is not, a mean-preserving increase in the variance will increase the ratio of the mean to the median [1,23]. 4 Opinion polls in Russia suggest that the inequality that most matters to the average citizen is that between Moscow -the reform capital -and the rest of the country, rather than the more general cross-regional differences that are captured by the Gini [27].…”

“…When inequality increases, the mean increases relative to the median. 3 Thus an increase in inequality is likely to make the median respondent feel worse off because she is objectively further from average income levels than she was before, even though her absolute income level did not change. Our work on Latin America (discussed below) borrows Luttmer's methodology to explore the importance of relative income and status.…”

“…They attribute this to self interest: the median voter believes she is more likely to benefit from such expenditures if inequality is lower. Benabou and Ok [3] constructed a theoretical model of the Bprospect of upward mobility^(the POUM hypothesis) in which poor people oppose redistribution because of the possibility that they or their children may move into a higher income bracket. Graham and Sukhtankar [18] find that respondents who support redistribution in the U.S. are less happy, on average, than others, while in Latin America those who favor redistribution are happier.…”

“…In contrast, it is possible to detect significant differences in expressed well being across various policy regimes. In this vein, happiness has been used to analyze the effects of growth [12], inflation [11], and unemployment [7,3].…”

Vacancy chains and the degree of mobility in the housing market

“…A partial list of the more recent works (among an extremely large number of studies in this area) includes Jiankoplos and Menchik (1997),Dickens (2000),Benabou and Ok (2001),Kettunen (2002),Kent et al (2003),Clark and Ledwith (2006), andHart (2006). Also see, among many others,Akerlof et al (1988),Blum et al (1997), andPhelan (2006).…”