Our Feelings About Inequality: It’s Complicated


Ilyana Kuziemko and Stefanie Stantcheva in the NYT (image from Wikimedia Commons):

How much do Americans care about rising income inequality? Surveys send mixed signals.

In a poll released last year by the Pew Research Center, two-thirds of Americans agreed that there were “strong conflicts between the rich and poor” — up substantially from when the question was asked in 2009 — but in a Gallup poll taken at the height of Occupy Wall Street, in the fall of 2011, reducing the income and wealth gap was low on respondents’ list of priorities for government action.

It seems like a paradox: Americans are increasingly worried about the gap between rich and poor, but are hesitant to have the government do anything about it.

An experiment we conducted, described in more detail below, may help explain the contradiction. Americans who were given more information about rising inequality expressed significant concern about the problem, but that concern did not always translate into greater support for redistributive policies. Our work identified a possible explanation for this seeming disconnect, and it is a sad one: the more people focused on inequality, the less they trusted the government.

How much Americans care about income inequality and the extent to which they want the government to address it are two distinct questions that are often conflated. Democrats and Republicans agree that America faces a long-run fiscal imbalance that in the coming decades will most likely require cutting social services, raising taxes or both — policies that directly influence income distribution. Who will bear the brunt of this rebalancing will depend on whether the government uses tax and other policies to counteract rising income inequality with greater redistribution.

Since the 1970s, income inequality in the United States has increased at a historic rate. In 1970, the richest 1 percent of Americans enjoyed 9 percent of total national pre-tax income. In 2011, by contrast, that share had risen to 19.8 percent. And this large increase in inequality has not been softened by more progressive tax policy. Tax rates on the top 1 percent of taxpayers have fallen over the same period.