Americans Tolerate Inequality Because They Over-Estimate Their Odds of Coming Out on Top
John Steinbeck conjectured in 1966 that there is not much support for redistribution in America because the working poor saw themselves as “temporarily embarrassed millionaires”. Are people willing to accept high levels of inequality if they think that everyone has a shot at climbing the social ladder? Is tolerance for inequality linked to belief in equality of opportunity?
These questions are especially relevant today, with sharply increasing inequality in many industrial economies and especially in the US. Whether or not redistribution or equal opportunity policies are supported depends on perceptions of fairness of the market system.
The (stereo)typical view on intergenerational mobility distinguishes between ‘American’ and ‘European’ attitudes.
Americans are thought to view the market system as relatively fair, and to believe in the ‘American dream’. Thus, they see view wealth as a reward for ability and effort, and poverty as the result of inability to take advantage of opportunities.
In contrast, Europeans tend to believe that the economic system is unfair, and that wealth is the result of
and that wealth is the result of circumstances, family history, connections, and sticky social classes. Poverty is the result of bad luck and the inability of society to take care of the needy regardless of their effort.
Today, however, the American dream may be more accurately described by the green light at the end of Daisy’s dock in
The Great Gatsby – which Gatsby likes to contemplate and reachs for relentlessly – the embodiment of a “dream” that seems “so close that [we] could hardly fail to grasp it”, that provides Gatsby with profound motivation to work hard and succeed, and yet ends up being out of reach and unattainable. In fact, new data suggest that intergenerational mobility in the US may, in fact, not be higher on average than in Europe, even though within the US there are large geographical differences in intergenerational mobility.
In a recent paper, we collect new survey and experimental data for five countries (France, Italy, Sweden, the UK, and the US), to document the anatomy of people’s beliefs about intergenerational mobility and the fairness of their economic system (Alesina et al. 2017). We begin by comparing people’s perceptions of mobility to recent data on actual intergenerational mobility in the five countries.
Intergenerational mobility and preferences for redistribution | VOX, CEPR