Misfortune and redistributive preferences

Abstract

This dissertation delves into the question of when and why people come to oppose large income disparities. While social scientists have shown that self-interest matters in some cases, much remains to be understood about why sometimes values and beliefs take precedence while some other times they do not. In three independent empirical chapters, I explore this by looking at how different types of misfortune shape inequality attitudes differently. In chapters 2 and 3 I study natural disasters and find that they do not always increase redistributive demands. Chapter 2 takes a cross-country approach and studies risk and incidence of different types of disasters. Results show that it is unpredictable and surprising disasters such as earthquakes that trigger an increase demands that incomes should be made more equal whereas predictable disasters such as tropical storms do not. Chapter 3 zooms into the case of one of the largest earthquakes ever recorded, the 2011 Tohoku earthquake in Japan, to investigate in detail how a shared experience of bad luck that cuts across socio-economic fault lines impacts redistributive demands. Exploiting a natural experiment and unique panel data on the same individuals before and after the event, I show that even though the disaster does increase demands to redistribute to the poor it leaves demands to redistribute from the rich (higher taxes on the rich) unaffected. I argue demands to redistribute increase because the disaster forces close experiences with socio-economic others and increase social affinity to the poor. At the same time, even though natural disasters do disproportionately impact the poor, demands to ‘soak the rich’ do not increase because the rich are unlikely to become antagonists as the public often perceives these catastrophes as a force of nature and due to bad luck. Results stand in contrast with findings that financial crises increase demands for progressive taxation and highlight how different types of shocks may have different consequences. My findings thus highlight an important caveat to the ability of natural disasters to bring about a reckoning with inequality. Finally, Chapter 4 shifts focus away from natural disasters and considers a more mundane type of misfortune: living in precarious material circumstances. The chapter explores how income interacts with belief in meritocracy in shaping attitudes toward inequality. Contrary to previous work, our results from three cross-country surveys and an original experiment on a nationally representative sample show that the poor’s redistributive demands are not shaped by the extent to which they perceive inequality to stem out of effort or luck whereas such perception is decisive for the rich. Results are consistent with two explanations. The first one is based on the idea that poverty reduces the importance of other-regarding concerns in redistributive preferences and the second one is based on an overlooked observation by sociologist Michael Young: losing out due to effort may be just as if not more painful than losing out due to luck. Results from the original experiment are consistent with this explanation, as negative emotional reactions are just as if not more intense when losing out in a contest where the winner is declared based on performance than when it is based on luck. Findings from this last chapter stand in contrast with the increasingly common view in the literature that individuals tend to accept as fair inequality stemming out of effort and oppose inequality stemming out of luck. Taken together, findings in this dissertation have important implications for the politics of redistribution in the 21st century.