The Political Implications of American Concerns about Economic Inequality

Graham Wright

Economists and political scientists have often argued that, in a well-functioning democratic system, an increase in economic inequality should lead the public to become more supportive of government redistribution. On an intuitive level, it seems logical that as inequality grows the proportion of the population who would benefit from it being reduced should also grow. In line with this intuition, recent scholarship exploring American attitudes towards inequality (Bartels, 2008; Hayes, 2014; McCall, 2013; Page & Jacobs, 2009) argues that American concerns about economic inequality lead to increased support for government action in the economy.

However, this research suffers from two methodological problems. The first is the difficulty in actually measuring American attitudes about economic inequality. Political scientists have long known that American responses to individual survey questions about political issues are highly unstable, so questions that appear to be measuring “concern about economic inequality” may be measuring something else entirely. Developing a valid measure of “concern” requires using methods such as factor analysis to extract a latent construct from the responses to a set of related items, but this has not been done in prior research.

The second problem is that past work relies mainly on cross-sectional analyses, which cannot account for the possibility that the “causal arrow” between concerns about inequality and desire for a government response runs in both directions simultaneously. When previous research has found a correlation between concern and support for government action it has interpreted this result as implying that increased concern causes increased support for government action. But it could also be the case that it is Americans’ support for (or opposition to) government intervention that causes them to become more (or less) concerned about inequality.

In this article I address both of these limitations by extracting a latent construct “national concern about economic inequality over time” from a set of marginals of national survey questions using the dyad-ratios algorithm, which was originally developed by James Stimson to construct a national level measure of Americans’ “domestic policy mood.” This analysis shows that American concerns about inequality seem to reflect not only concerns over unequal outcomes (viz. money and wealth) but also concerns about unequal opportunities (viz. a lack of social mobility). However, it also finds that a set of items asked in the GSS, which a number of scholars have used to measure American attitudes about inequality, are poor measures of this construct.

To overcome the limitations of cross-sectional analyses noted above, I use an error correction model to test the hypothesis that an increase in national concern about economic inequality leads to a subsequent increase in national support for government action, as measured by Stimson’s “policy mood.” I find no evidence that an increase in national concern about inequality leads to an increase in support for government intervention in the economy. This null result is robust to a wide variety of alternative model specifications. In fact, once confounding factors are accounted for, there is limited evidence that an increase in concern could lead to reduced support for government intervention. This finding suggests that rhetorical efforts to “problematize” economic inequality without connecting this problem to specific policy solutions (the strategy used by the Occupy movement) may produce unintended consequences. In general the political implications of Americans’ views on economic inequality appear far more complex than previously assumed.

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