With rising global income inequality, Charlotte Cavaillé asks why society isn’t doing more to redistribute income.
Cavaillé, assistant professor of public policy at the Ford School of Public Policy, challenges the assumptions about how we think about inequality-reducing policies.
“There are important distinctions between policies that affect how much people earn, like taxes or salary caps, and those that use pooled resources to cover high-risk individuals irrespective of their contributions,” she says.
Cavaillé, who examines the dynamics of popular attitudes toward redistributive social policies at a time of rising inequality, high fiscal stress, and high levels of immigration, broke down the politics of redistribution in a recent episode of “Scope Conditions,” a comparative politics podcast.
The economics of human behavior
To understand why rising inequality does not equate to support for redistribution policies, Cavaillé says we must draw on behavioral economics to understand “the type of glasses that we wear to interpret the world.”
Cavaillé finds in addition to the classical economic assumption that people are fundamentally self-interested income maximizers, people also have an extremely strong sense of fairness.
In the context of redistribution, that leads her to two questions: “How fair is it for some to make more money than others in the marketplace?” and “How fair is it for some to receive more in social benefits than they pay in taxes?”
Still, Cavaillé contends it is not just about taking from the rich and giving to the poor. How people answer the first question shapes how much they want to take from the rich, and how they answer the second shapes how much they want to give to the poor.
When considering the fairness of policies that take from the rich (progressive taxation) depends on whether one thinks the rich deserve their income.
“They are more likely to think that they do if they believe that income differences are proportional to effort and talent,” she says. “Willingness to support taxing the rich is a function of whether or not one sees the economic system as fair.”
Perception is reality
But with policies that give to the poor (social insurance, welfare, or access to health care irrespective of ability to pay), a person’s concept of fairness is shaped by the perceptions that the poor are deserving and neither free-riding nor trying to take advantage of the benefit system.
“Willingness to support social insurance policies is a function of whether or not you think that the poor are people that you can trust, that you owe social solidarity to, or they are people that you cannot trust because they are free riders or they just don’t belong,” she says. “The interesting finding is that people who find the rich deserving of taxation do not necessarily find the poor deserving of transfers.”
Education and income are important factors that shape perspectives on fairness.
Those with high incomes and high education levels are more likely to be “economic winners,” who see the system as fair and thus have more negative attitudes toward taxation policies that redistribute income.
Trust that poor people are not gaming the system is higher among highly educated people, who hold what social scientists call “liberal moral values.” It is lower among low-educated people who hold “authoritarian moral values.”
As a result, Cavaillé finds the more education one has makes one more conservative on policies that take from the rich and more liberal on policies that give to the poor.
Cavaillé is turning her dissertation into a book manuscript whose working title is “Fair Enough: Support for Redistribution in the Age of Inequality.”