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March 2017
Miquel Pellicer
University College Dublin miquel.pellicer@ucd.iePatrizio Piraino
University of Cape Town patrizio.piraino@uct.ac.zaEva Wegner
University College Dublin eva.wegner@ucd.ieThis policy brief presents a novel way to understand the often observed
discon-nect between low-income citizens’ concerns about high inequality and a lack of
demand for redistribution, using the case of South Africa. The proposed
mecha-nism underlying the lack of demand for change is the perceived inevitability of
the large gap between the rich and the poor. Providing urban low-income
indi-viduals an international comparison of inequality in South Africa with other
countries reduces their perception that high inequality is inevitable and
signifi-cantly increases the demand for government to engage in redistributive policies.
The demand for redistribution, and the willingness to engage in civil action to
achieve it, may first require the belief that change itself is possible.
In light of rising inequality in many countries, there is renewed interest in understanding the effect of different levels of inequality on redistribution. Contrary to what one might expect, there is little evi-dence to suggest that increasing inequality leads to higher demand for income redistribution.1 Inequal-ity has often been observed to persist at very high levels (Bourguignon, Ferreira and Walton, 2007). Studies in social psychology argue that inequality and grievances are not enough to push individuals to
1
This notion is captured by the standard “median voter” framework in which higher levels of inequality are mediated by high redistribution to prevent persistent very high inequality (Meltzer and Richard, 1981).
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mobilize for social change; they need to feel that the situation can be changed.2 Recent research inves-tigates the effects of inequality-related information on demand for redistribution with survey experi-ments. Interestingly, while providing information on the increase in income inequality in the U.S. led respondents to perceive inequality as a more serious problem, this did not carry over to actual tax poli-cy preferences (Kuziemko et al., 2015).
A type of mechanism likely to be of particular importance in high-inequality settings is the perception of the changeability/inevitability of the status quo. If citizens believe that high inequality cannot be changed, they may become resigned and demobilized, demanding little redistribution as a way to cope with their situation.3 There are surprisingly low levels of demand for redistribution by low-income citizens in South Africa, one of the most unequal countries in the world. This makes South Africa a suitable case study to examine the plausibility of the so far unexplored mechanism of inevitability in a high-inequality setting.
The survey experiment examined whether the perception of high inequality as inevitable is a signifi-cant factor in the low demand for redistribution by urban low-income South Africans. Analysis of the resulting data showed that beliefs about the inevitability of inequality by different urban, low-income population groups can be influenced by gaining knowledge about lower inequality elsewhere. Partici-pants exposed to information that put South African inequality in an international perspective update their views and also increase their support for redistributive policies. In Table 1 we see that a very high share of the control comparison group (91 percent) agreed with the statement that inequality is a serious problem in South Africa.4 However, this concern does not translate into high shares of re-spondents who want to increase taxes for the rich. Only 7 percent of the control group want to increase taxes for the rich. This suggests concerns about inequality are not sufficient to generate redistributive tax preferences. The large gap between the intention to send an SMS (at small personal cost) and the actual transmission highlights the importance of introducing measurable behavioural outcomes in sur-vey experiments. The main results of the sursur-vey experiment were as follows:
First, visual information that compares South Africa’s inequality to other countries strongly reduces the perception that inequality is inevitable. Respondents are 11 percentage points less likely to think that high inequality is inevitable after seeing the much lower income gaps in other countries, compared to the baseline level of 54 percent in the control group (see Figure 1). Local information on inequality does not significantly affect this perception and the video messages of politicians condemning inequal-ity have no significant additional effect.
Secondly, providing information about the much lower inequality elsewhere increases demand for redistributive government policies. The international information treatment group exhibits sig-nificantly greater support for a more progressive high-income tax rate (see Figure 2) and the introduc-tion of a basic income grant. In contrast, providing informaintroduc-tion about local inequality does not affect policy preferences for redistribution. Similarly, the video messages from political elites condemning inequality have no effect on demand for redistribution.
2 See for example Klandermans (1984); Van Zomeren, Postmes and Spears (2008).
3 This follows from the psychology literature on “coping” which argues that problematic situations viewed as unchangeable are likely to cause resignation or the altering of beliefs and values to lessen the emotional discom-fort of the unchangeable problematic situation.
4 In contrast, Kuziemko et al. (2015) find an average of 28 percent of the their control group agree with the same statement in the United States, a much lower baseline level.
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Table 1. Key outcome variables in the control group
Figure 1. Attitudes towards inequality Figure 2. Policy preferences: Percentage of respondents who believe Demand for progressive top income tax
inequality is inevitable
The perception that the large gap between the rich and the poor is inevitable appears to be an im-portant determinant of individual preferences for redistribution. These beliefs can be quite pervasive in contexts, such as South Africa, where high inequality is a persistent norm. However, beliefs about the inevitability of inequality can be influenced by gaining knowledge about lower inequality elsewhere. Urban low-income individuals exposed to this type of comparative information significantly update their views about the likelihood that inequality is unchangeable and also increase their support for redistributive policies by government. The effect of such information appears to be driven by the mere fact of seeing that inequality in other countries is comparatively lower – effectively questioning peo-ple’s notion of inequality as ‘a fact of life’. This explains why information on inequality, which is not
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anchored to comparisons of what is possible, might encourage resignation rather than demands for policy change – that is, if citizens have the view that nothing can really be done about it. The research suggests that a fruitful path to addressing the missing link in the documented mismatch between con-cerns for inequality and preferences for redistribution policies would be an increased focus on inevita-bility/intractability beliefs. This mechanism was previously unexplored and would benefit from further investigation.
A survey experiment was designed to affect the perceived inevitability of inequality in a low-income setting (see Figure 3). The two rounds of the survey had three identical experimental treatments that provide the main research results. The first two treatments contained visual information on inequality in South Africa in a (i) local and (ii) internationally comparative perspective. A second-stage treatment condition provided video messages of political leaders speaking on the need to fight inequality. The videos were given in addition to either the ‘international’ or the ‘local’ information treatment groups. The local information treatment showed bar charts of differences (in income, and other assets) be-tween several neighbourhoods in Cape Town known to respondents as relatively rich or poor areas (see Figure 4). Before participants were shown the visual information they were asked what they thought – e.g. “How much do you think a typical household earns per month in [name of neighbour-hood]?”. The aim was to inform survey respondents about the high levels of inequality between neigh-bourhoods.
The international treatment showed that South Africa’s rich-poor ratio is by far the worst compared to some developing and high-income countries and was intended to suggest that South Africa’s inequali-ty is not the norm (see Figure 5).
The data come from a survey of 2445 respondents in three low-income townships of the Cape Town metropolitan area in South Africa. There were two waves of the survey. The first in March/April 2014 – just before the South African general elections. – and the second in March 2015. We find a similar treatment effect for two different urban low-income race groups ‘African Black’ and ‘Coloured’, as well as in both waves of the survey. Survey responses were captured on mobile devices and directly transmitted to the server after completion of the interview along with GPS location, which allowed for data quality checks. Randomization was programmed into the mobile devices used for the survey, which allows for a causal interpretation of the effect of the information/messages treatments.
Figure 3. Survey Design
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Figure 4. International information treatment – Rich-Poor Ratio across countries
Descriptive analysis shows key outcomes in the control group: attitudes toward inequality (i.e. whether inequality a problem (how much responsibility should government take, and whether inequality is inevitable), policy preferences (i.e. support for a progressive top-income tax, a basic income grant, and higher general tax for everyone), and “action” outcomes, namely the option to send an SMS (at a real cost) or to sign an online petition on the surveyor’s tablet. The analysis of treatment effects of different types of infor-mation/messages on the above outcomes uses regression analysis. The treatment effects of providing information about inequality are estimated using four treatment dummy variables: local information, local information plus video, international information, international information plus video. The results show that information/messages affect both attitudes and behavioural outcomes. While the design cannot conclusively prove that the estimated effects on the preference for redistribution are solely due to the mecha-nism of inevitability, the analysis rules out the plausibility of alternative explanations.
Alesina, A. and Giuliano, P. (2011). Preferences for Redistribution. In Handbook of Social Econo-mics, ed. Ori Heffetz, Robert H Frank, Jess Benhabib, Alberto Bisin and Matthew Jackson. North Holland, 93-132.
Bourguignon, F., Ferreira, F. H., and Walton, M. (2007). Equity, efficiency and inequality traps: A research agenda. Journal of Economic Inequality, 5(2), 235-256.
Kuziemko, I., Norton, M. I., Saez, E. and Stantcheva, S. (2015). “How elastic are preferences for re-distribution? Evidence from randomized survey experiments.” American Economic Review 105(4).
Trump, K-S. (forthcoming). Income inequality influences perceptions of legitimate income diffe-rences. British Journal of Political Science.
FURTHER READINGS
Figure 5. Example of local treat-ment
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PROJECT NAME NOPOOR – Enhancing Knowledge for Renewed Policies against Poverty
COORDINATOR Institut de Recherche pour le Développement, Marseille, France
CONSORTIUM CDD The Ghana Center for Democratic Development – Accra, Ghana CDE Centre for Development Economics – Delhi, India
CNRS (India Unit) Centre de Sciences Humaines – New Delhi, India
CRES Consortium pour la Recherche Èconomique et Sociale – Dakar, Senegal GIGA German Institute of Global and Area Studies – Hamburg, Germany GRADE Grupo de Análisis para el Desarrollo – Lima, Peru
IfW Kiel Institute for the World Economy – Kiel, Germany IRD Institut de Recherche pour le Développement – Paris, France
ITESM Instituto Tecnológico y de Estudios Superiores de Monterrey – Monterrey, Mexico
LISER Luxemburg Institute of Socio-Economic Research – Esch-sur-Alzette, Luxemburg
OIKODROM - The Vienna Institute for Urban Sustainability – Vienna, Austria UA-CEE Université d’Antananarivo – Antananarivo, Madagascar
UAM Universidad Autónoma de Madrid – Madrid, Spain UCHILE Universidad de Chile – Santiago de Chile, Chile
UCT–SALDRU University of Cape Town – Cape Town, South Africa UFRJ Universidade Federal do Rio de Janeiro – Rio de Janeiro, Brazil UNAMUR Université de Namur – Namur, Belgium
UOXF-CSAE University of Oxford, Centre for the Study of African Economies – Oxford, United Kingdom
VASS Vietnamese Academy of Social Sciences – Hanoi, Vietnam
FUNDING SCHEME FP7 Framework Programme for Research of the European Union –SSH.2011.4.1-1: Tackling poverty in a development context, Collaborative project/Specific Interna-tional Cooperation Action. Grant Agreement No. 290752
DURATION April 2012 – September 2017 (66 months)
BUDGET EU contribution: 8 000 000 €
WEBSITE http://www.nopoor.eu/
FOR MORE INFOR-MATION
Xavier Oudin, oudin@dial.prd.fr Delia Visan, delia.visan@ird.fr
EDITORIAL TEAM Anne-Sophie Robilliard (IRD)
The views expressed in this paper are those of the authors and do not necessarily represent the views of the European Commission.