Academic journal article Michigan Academician

The Effects of Perceptions of Economic Inequality on Policy Preferences: Evidence from Michigan

Academic journal article Michigan Academician

The Effects of Perceptions of Economic Inequality on Policy Preferences: Evidence from Michigan

Article excerpt

INTRODUCTION

In this paper, we study perceptions of income inequality, economic mobility, and labor-market discrimination, and the effects of these perceptions on policy preferences, using data from a survey of a random sample of Michigan adults. We hypothesize that individuals' policy preferences are shaped by their perceptions of the degree and nature of economic inequality, even when we control for ideology and other potentially relevant factors.

We argue that these perceptions affect preferences toward policies that are substantially economic in nature, such as cash assistance for the poor: People who perceive high levels of inequality will be more likely to favor active government measures to reduce inequality, especially if the inequality is perceived as being due to discrimination. Similarly, those who perceive lower levels of inequality, and/or who believe that such inequality results from inherent differences among people (rather than from discrimination), will be more likely to oppose active government measures to reduce those inequalities, and may prefer policies that have the effect of increasing existing inequalities.

Our approach is similar to that of Alesina and Glaeser (2004) and Alesina and La Ferrara (2000, 2002), who explore the roles of personal and attitudinal factors and policy context on support for redistributive policies. However, our work differs from theirs in three major respects. First, our study extends beyond preferences for redistribution. We examine the ways in which perceptions of economic inequality and discrimination shape preferences on a wide range of public policies, including some issues that are not narrowly economic in nature. Second, we incorporate political ideology explicitly. We estimate the marginal effect of perceptions of income inequality, economic mobility, and labor-market discrimination, controlling for self-reported ideology. Third, we investigate the extent to which the degree of polarization influences the relationships between inequality perceptions, self-reported ideology, and policy preferences.

One important feature of our paper is that we examine abortion, the death penalty, and gay rights, which are not usually considered to be related directly to economic inequality. However, even though these issues are not related to economic inequality in a narrow sense, it is nevertheless possible that perceptions of economic inequality will have effects on attitudes toward abortion, the death penalty, and gay rights. In considering these policy issues, we expect perceptions of income inequality, economic mobility, and labor-market discrimination to serve as a proxy for more general perceptions of inequality (i.e., those who perceive a world with greater economic inequality may also perceive greater inequalities in a variety of social relationships). Indeed, in many cases, our results support the hypothesis that perceptions of income inequality, economic mobility, and labor-market discrimination have important effects on policy preferences toward issues that are not narrowly economic.

We use data from a public-opinion survey of a random sample of the Michigan adult population to analyze preferences toward six policy issues: (1) cash payments for poor families, (2) military spending, (3) the power of corporations, (4) abortion, (5) the death penalty, and (6) the rights of gays and lesbians. Our empirical analysis shows that perceptions of income inequality and labor-market discrimination have significant effects in explaining the variation in preferences toward all of these policies, even when we control for political-party affiliation, self-reported ideology, and a large number of other covariates. These effects tend to be more important for issues on which the degree of political polarization is relatively small, in the sense that the variance of response is relatively small.

We measure ideology on the standard seven-point scale ranging from very liberal (coded as 1) to very conservative (coded as 7), with moderate coded as 4- Jacoby (2009) argues that citizens with different degrees of political sophistication tend to use liberal-conservative terms differently. …

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