Inequality and Media Capture
If income inequality is going up in a country, the lower class (and probably the middle-class too) would like some sort of income redistribution to reduce the rising levels of income inequality. So why do some countries have higher levels of income inequality than others? One explanation, of course, is that the institutional structure in certain countries limits the influence of the lower-class to obtain their preferred policy of higher levels of redistribution. Maria Petrova, a PhD candidate at Harvard University’s Political Economy and Government department, has another explanation. She writes in The Journal of Public Economics that the lower-class misperceives their self-interest to increase levels of redistribution. Why? She argues,
Unequal societies may have a low level of redistribution because the median voter may misperceive her self-interest as a result of an information campaign by the rich. Higher inequality in the economy implies more incentive for the rich to manipulate the preferences of voters and to use the power of the media to advocate a lower level of taxation. The influence of the rich on the media is one reason why income inequality leads to political inequality, and why policy outcomes are more responsive to the preferences of the rich than to those of the poor.
Is there evidence in the US? As Petrova notes,
- Bartels (2005) finds that the public support for the estate tax repeal in the US can be explained by “unenlightened self-interest”. He shows that most people with low and middle incomes have limited information about the tax, and that support for the tax repeal, which is not in their self-interest, is decreasing with the level of information which they have (ungated).
- Gilens, (2005) shows, using survey data, that the preferences of Americans with high-income have much greater influence on policy outcomes than Americans with low income (ungated and gated); Bartels (2006) finds a similar effect for roll-call votes (ungated).
Comments
Petrova’s assumptions are that poor people are driven by envy, that envy is a good reason for theft and that the political process is the preferred means for theft. She assumes that poor people are incapable of political thought and of ideas of right and wrong, and therefore any political action they take other than enriching themselves at others expense must be the result of their manipulation by greedy rich people. This is a stunningly condescending view of the poor.
Posted by: Robert L. | January 17, 2008 12:28 PM
Well, Robert, she’s not alone. This “condescending” assumption goes back a few years … to Aristotle, for example. Undoubtedly, she does not expect superior motives from the rich either. If the interest group activities of organized money—which structures the market that chiefly influences the libertarian’s preferred means for distributing resources—qualifies as theft too, then her view is simply even-handed rather than condescending.
Posted by: Mike L. | January 17, 2008 04:32 PM
Do people vote their economic self-interest? The wealthy, yes. But it may be very difficult in current US politics for most people to figure out how a candidate or policy will affect them economically. The Bush tax cuts favored the wealthy, but did the nonwealthy, the average-income people and below, see themselves as being the losers? After all, they got a couple of hundred dollars. I doubt that most people saw even the estate tax repeal as harmful to their economic interest. It’s hard to see how repealing someone else’s tax hurts me so long as Bush or whoever is promising not to raise my taxes.
Posted by: Jay Livingston | January 18, 2008 09:54 AM
I think this theory is really bad social science theory. How can you refer to “incentives” for a whole social class “The Rich”, claim that the social class will act because of those incentives, without even suggesting a mechanism for them to coordinate that action? The logic of collective action is not even casually mentioned in the paper.
I talk about this more here: http://goodmorningeconomics.wordpress.com/2008/01/18/abuse-of-the-word-incentive/
Posted by: jsalvati | January 19, 2008 02:07 AM