The Limits of Income Inequality: Public Support for Social Policy across Rich Democracies

Abstract

Does public opinion react to inequality, and if so, how? The social harms caused by increasing inequality should cause public opinion to ramp up demand for social welfare protections.However, the public may react to inequality differently depending on institutional context. Using ISSP and WID data (1980-2006) we tested these claims. In liberal institutional contexts (mostly English-speaking), increasing income inequality predicted higher support for state provision of social welfare. In coordinated and universalist contexts (mostly of Europe), increasing inequality predicted less support. Historically higher income concentration predicted less public support, providing an account of the large variation in inequality within the respective liberal and coordinated contexts. The results suggest opinions in liberal societiesespecially with higher historical inequality -reached the limits of inequality, reacting negatively; whereas in coordinated/universalist societies -especially with lower historical inequality -opinions moved positively, as if desiring more inequality.

Strong Welfare States Do Not Intensify Public Support for Income Redistribution, but Even Reduce It among the Prosperous: A Multilevel Analysis of Public Opinion in 30 Countries

“…All this is also true of post-Communist nations, as well as long-established market economies [45]. Prior research on four countries also finds a close alignment of inequality perceptions (differently measured) and actual income inequality [50]. Of course, income inequality and GDP per capita are themselves highly (negatively) correlated (r = −0.75, N = 30 nations): Income inequality is typical of poor nations, equality common in prosperous ones.…”

“…Attitudes to income redistribution are also shaped by social mobility-both individual mobility, which reduces support, and societal levels of mobility, which increase it [43]. Moreover, support for the welfare state may be increasing as a function of inequality in liberal welfare states, while it is not in social democratic and coordinated welfare states [50].…”

“…Instead, it most obviously implies that the prosperous do not favor further redistribution (not necessarily retrenchment). It is possible that this will herald emerging class-based conflict over further expansion [50], a matter that requires exploration in future research, as will the possibility that increasing welfarism leads higher income people to perceive other drawbacks of the welfare state in addition to high taxation. It is also possible that those higher in status and income have a clearer perception of the magnitude of inequality, so where that is smaller, they are less supportive or further reduction.…”

“…Note that this does not necessarily imply that prosperous people in strong welfare states are dissatisfied with the current balance of costs and benefits of their welfare institutions, but rather that they do not seek further redistribution [158]. This atomistic economic self-interest may, through rational choice processes, lead them to welcome a neoliberal turn in their country's politics [50,159]. Recent research has raised the issue of net progressivity, or net gain/loss (including all taxes and all benefits) which is an intriguing matter for future research, especially when the necessary data become available beyond the 15 to 18 countries that have provided them thus far.…”