Author: Stefanie Stantcheva
Publication: The IFS Deaton Review [also NBER Working Paper 29370], 2021
The relationship between the degree of inequality and the demand for redistribution has been a central question in political science and political economy. The famous median-voter model predicts that higher inequality, reflected in a growing gap between the income of the average and the median voter, should lead to increased demand for redistribution, as policymakers cater to the median voter’s preferences (Meltzer and Richard, 1981). Yet, using data from OECD countries, Kenworthy and McCall (2008) show that, despite increases in inequality in those countries, there was no corresponding increase in demand for redistribution.
Part of the explanation of this puzzle lies in the realisation that it is not only (or even mainly) reality, but perceptions that shape support for policy. Perceptions of inequality, among others, may or may not be aligned with facts. Beyond beliefs about inequality, there are other perceptions on key issues that can deeply influence people’s views on redistribution. This article will explore beliefs about social mobility, diversity and immigration, social position, and understanding of how policies work.
One common thread in the studies presented here is the use of large-scale online social economics surveys and experiments. These can be powerful tools to elicit intangibles that would be difficult to extract from observed behaviour using revealed preference approaches, namely perceptions, knowledge, attitudes, or reasoning. Experiments are a particularly appealing tool to better understand how information interacts with misperceptions and how views on redistribution can be shaped.