Monday, January 14, 2008

Does rising inequality lead to higher demand for redistribution?

No, well at least not in the UK. This is the finding of a new study on inequality and redistribution. For a full report see this piece on VoxEU.

This is contra the expectation of the standard median-voter theory that rising inequality should produce more redistribution.

This article touches on the all-important question on how belief systems change over time. The study concludes: One way to summarise this conclusion is that what people believe is as important as the objective economic circumstances in explaining people’s attitudes to political issues like redistribution. And these beliefs can change fast. Such a conclusion is perhaps only a potential surprise to economists as it simply says that politics is a battle for ‘hearts and minds’.

The study does identify the question where those beliefs come from for further research.

Just a thought. In an increasingly postmodern and interconnected world belief systems tend to become more individualistic, flexible and forever changing. Established traditional relationships continue to break down in a world where beliefs are constantly challenged and changed through the free flow of information.

Another thought. In a discussion on the median voter model in the Encyclopedia of Public Choice the following was concluded: general, the median voter model appears to be quite robust as a model of public policy formation in areas where the median voter can credibly be thought to understand and care about public policy.

Maybe voters (in the UK) just do not understand or care about redistribution anymore.

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