Economic Inequality and
One of the temptations of a new data source is that it can be used to reexamine familiar questions. This chapter takes up one of them, namely, the relationship between political democracy and economic equality. In general, we ask whether political systems matter: Does the degree of economic inequality depend on the type of government? In particular, we examine the widely discussed proposition that democracy is an egalitarian form of government. When the people choose, can they (and do they) choose to be more equal, one to another, than is the case under other forms of government?
Our work casts new light on this question; better data do produce a clearer answer.1 It appears that long-standing “social democracies” do reduce inequality, but most political democracies are not of this type or have not been around long enough. But this exercise also illustrates a difficulty associated with large-scale qualitative classification schemes, such as those used to distinguish between types of government. To compare inequality to something else, you need both the inequality measures and data of acceptable quality on the other thing. The business of measuring inequality in a pay structure is (in principle) fairly clearcut, because we have a single consistent data source and a single method of calculation; anyone else working with our method and data would get the same answers that we do. But the task of developing a category scheme for all of the world’s governments is truly daunting; it involves many subjective choices, all of them open to question. There is a diversity of classification schemes in use, and practically any decision one makes might be made differently by another.