A new study explores cognitive processes that may explain why many who stand to gain from the redistribution of wealth continue to vote against it. The findings were published in Social Psychological and Personality Science.
Approximately one half of the world’s wealth belongs to an inordinately wealthy 1% of the population. Those who earn the least are in the majority, and yet, as the wealth gap continues to grow, support for policies that aim to reduce income inequality has remained stagnant.
Study authors Joshua Conrad Jackson and Keith Payne wondered whether the lack of support for wealth redistribution may have to do with the cognitive processes underlying an individual’s perception of their income. They proposed that people have distorted perceptions of their subjective income, causing them to underestimate the extent that they would benefit from the redistribution of wealth.
“Payne and I began studying this topic in the first year of my PhD. I am always interested in ways to apply new methods, and Payne reached out to me after I published a paper on the promise of agent-based modeling to answer social psychology questions. He asked me if we could apply agent-based modeling to understand why income inequality has continued to increase in democratic societies, a phenomenon which Barack Obama has called the ‘the defining challenge of our time.’ The result was this paper,” explained Jackson, a PhD student at University of North Carolina at Chapel Hill.
First, the researchers wanted to see whether attitudes towards wealth redistribution would be more reflective of a person’s subjective income than their actual income. The researchers analyzed data from a sample of 55,474 respondents from the General Social Survey, a nationally representative survey of Americans.
As a measure of subjective income, the survey asked respondents where their family income ranked compared to other American families, with the options, ‘far below average’, ‘below average’, ‘average’, ‘above average’, or ‘far above average’. The survey also asked respondents to indicate their income in dollars and assessed their attitudes towards wealth redistribution.
As expected, the distribution of subjects’ actual income was positively skewed, reflecting the fact that a small minority of respondents earned the majority of the income. However, the distribution of participants’ subjective income was normal.
As the authors say, “The normal distribution of subjective income indicates that most people report an “average” level of income, with roughly equal numbers feeling above and below average. This suggests that many people who actually have far less than the average American still considered themselves to have “average” wealth.”
Furthermore, subjective income predicted attitudes towards wealth redistribution, regardless of actual income. When controlling for actual income, participants who reported the highest subjective income, showed the least support for the redistribution of wealth. As the authors explain, “reliance on subjective income may turn people against redistribution who would benefit from it because in a normal distribution, roughly half of the population always feels wealthier than average.”
Next, the authors conducted an experimental study to see whether social comparison might explain how people perceive their income. Participants were randomly assigned a number of “bonus” points that was either “low” (20,346), “medium” (33,875), or “high” (60,452). Participants then rated the value of their bonuses after viewing other values that they were told had been awarded to other participants.
In the condition where subjects viewed a distribution of bonuses that reflected the actual distribution of income in the US, those with higher bonuses perceived their bonuses to be higher. But in another condition where participants viewed bonuses that were mainly similar to their own, participants’ actual number of points had no relationship to how they felt about their bonuses.
“Many people don’t know this, but most Americans suffer from our taxation system. People remain divided on whether higher taxes are good or bad for the country, but the reality is that a large percent of Americans would benefit substantially from better welfare programs, and better public schools and hospitals. The reason that many people oppose these policies is that they feel wealthier than they really are,” Jackson told PsyPost.
“Our paper shows that this feeling of wealth comes from two causes. First, people tend to compare themselves to people who make a similar amount of money, meaning that a poor person in a poor neighborhood might feel middle class. Second, people underestimate the gap between the ultra-wealthy and themselves. Our paper shows that these mistaken perceptions exist, and shows how damaging they can be for the economy. So I guess, in sum, people should understand that they aren’t as wealthy as they think they are, and they might benefit more from higher taxes than they think they will.”
The authors suggest that there are ways to overcome these misperceptions. “Accessible resources that help people learn whether they will benefit from wealth redistribution could help people select economic policies that are in their best interest,” they say. “On a larger scale, reducing residential segregation or otherwise increasing intergroup contact across social class lines could facilitate more representative social comparisons and more accurate judgments of economic self-interest.”
“The next step is to translate this research into an intervention. We need easy methods for Americans to calculate whether they would benefit from economic policies, and more transparency about the pros and cons of different taxation policies. I’m really looking forward to seeing these sorts of interventions,” Jackson said.
The study, “Cognitive Barriers to Reducing Income Inequality”, was authored by Joshua Conrad Jackson and Keith Payne.