Attitudes to inequality: a cohort perspective

Márton Medgyesi,Márton Medgyesi,TÁRKI, Social Research InstituteTÁRKI, Social Research Institute

  

GINI Project, Year 1 Conference4-5 February, 2011, University of Milan

Research questions

• How do valuation of inequalities respond to differences in inequality?

• Analyze whether there is convergence of attitudes between ex-socialist and market economies. Are younger cohorts (of ex-socialist and market economies) more similar in their attitudes than older cohorts?

Theoretical arguments

Effect of inequality on attitudes to inequality

Level of inequality:• If there is universal norm about level of acceptable inequality: we will see

higher frustration in countries with higher inequality.• Not very likely: countries differ in their values, inequality aversion.• How inequality comes about might also matter for the evaluation of current

inequalities (fairness of the process that generates inequality).• If attitudes adapt to real situation: changes might matter more than levels!

Increasing inequality:• Relative deprivation theory: asserts that people dislike rising inequality if it

means a deterioration of their relative position compared to their reference group.

• People tend to accept increasing incomes of others (rising inequality) if this informs them about a likely improvement of their own situation in the near future (Hirschman, 1973).

Theoretical arguments (2)

Convergence of attitudes

• After the transition process ex-socialist countries became more similar to market eonomies.

Inequality levels before transition were lower, then sharp increase in the begining of ’90s for ex-socialist countries,

now they have more similar inequality levels.• Is a convergence of attitudes taking place?

Convergence can happen:• by uniform shift of values: eg. if values adapt to the actual situation,

than inhabitants of ex-socialist countries would (with a certain time lag) accept higher levels of inequalities.

• by cohort replacement: more egalitarian older cohorts will be replaced by younger cohorts more willing to accept inequalities. Eg. socialist legacy hypothesis.

Empirical results

Effect of inequality on attitudes: results dependent on data and measurement• Lubker (IntLabRev, 2004): significant effect of Gini in country-level regression,

• Hadler (ActaSoc, 2005): no effect of Gini in multilevel model based on ISSP 1999 data.

• Murthi and Tiongson (WB, 2008): significant effect of Gini, WVS wide country coverage

• Yaish and Andersen (2011):significant effect of Gini in multilevel model.

Socialist legacy hypothesis:

Authors Dependent variable

Country and time coverage

Datasource Age interaction

Corneo (2004) Preferences for redistribution

Germany 1992, 1999

ISSP No

Kelley and Zagorski (2004)

Earnings elite occupations ought to earn relative to

workers

6 CEE countries, 32 Western countries

1987-2001

ISSP, ISEA No

Alesina and Fuchs-Schündeln (2007)

State involvment in social security

Germany 1997, 2002

GSOEP Yes

Murthi and Tiongson (2008)

Inequalities are too large

Around 1990, 2000

World Value Survey

No

Andersen and Fetner (2008)

Gini of ought to earn earnings

1992, 1999 ISSP No

• Data from: Eurobarometer Survey On Poverty And Social Exclusion (Special Eurobarometer 321 / Wave 72.1) September 2009.

• Dependent variable: „nowadays in (our country) income differences between people are far too large” (4-point scale).

• Inequality indicators: EU-SILC UDB 2008, data on incomes for year 2007.

Data and measurement

Individual factors explaining attitudes towards inequalities

Self-interest:• Static view: those with higher incomes accept higher levels of inequality• Dynamic view: those expecting upward mobility accept higher levels of

inequality

Measurement: • Employment status: employed, self-employed, not working • Material status index: index based on ownership of durables (TV, DVD player,

music CD player, computer and car).• Subjective status: respondent’s own description of the situation of the household

as “poor”, “rich” or “neither poor nor rich” • Future expectations: expectations of financial situation of household in the next

twelve month: „better”, „worse”, „the same” Also controlling for: gender, age, schooling, type of settlement, household type,

household size, no. of children, country dummies

Attitudes towards inequalities in EU countries, 2009

Agreement with the statement: „In your country inequalities are far too large”

0%

20%

40%

60%

80%

100%

dk se fi nl at be lu fr de uk ie it es pt cy gr pl cz sk si hu lt ee lv ro bg

Nordic Continental Anglo-Saxon

Mediterranean Central Europe Baltic South-East Eu

totally agree tend to agree disagree (totally or tend to)

Actual inequality and attitudes towards inequalities

be

dk

de

gr

es

fi

fr

ie

it

lu

nlat

pt

seuk

cy

cz

eehu

lv

lt

pl

sk

sibg

ro

3040

5060

7080

.2 .25 .3 .35 .4

senm Fitted values

Gini coefficient

be

dk

de

gr

es

fi

fr

ie

it

lu

nlat

pt

seuk

cy

cz

eehu

lv

lt

pl

sk

sibg

ro

3040

5060

7080

2 3 4 5 6

senm Fitted values

P90/P10

Actual inequality and attitudes towards inequalities (2)

be

dk

de

gr

es

fi

fr

ie

it

lu

nlat

pt

seuk

cy

cz

eehu

lv

lt

pl

sk

sibg

ro

3040

5060

7080

.3 .4 .5 .6

senm Fitted values

be

dk

de

gr

es

fi

fr

ie

it

lu

nlat

pt

seuk

cy

cz

eehu

lv

lt

pl

sk

sibg

ro

3040

5060

7080

10 15 20 25

senm Fitted values

MDMI Poverty rate

Effect of contextual variables (1): coefficients from ordered logit model (clustered se, individual controls included)

Dependent variable: agreement with „Inequalities are too large” (4point scale)

Model

1a Model

1b Model

2a Model

2b Model

3a Model

3b Model

4a Model

4b

Gini -4.061 -3.252

(-1.40) (-1.50)

P90/P10 -0.273* -0.198

(-2.20) (-1.82)

MDMI -1.547 -1.896

(-0.99) (-1.80)

FGT0 -0.0586* -0.0530**

(-2.29) (-2.64)

GDP -0.000469 -0.000777 -0.000109 -0.00151

(-0.27) (-0.48) (-0.07) (-1.15)

Ex-socialist -0.799*** -0.771*** -0.830*** -0.826***

(-3.43) (-3.40) (-3.61) (-3.86)

N 20984 20984 20984 20984 20984 20984 20984 20984

Effect of contextual variables (2): coefficients from multilevel random intercept logit model (individual controls included)

Dependent variable: % totally agreeing that inequalities are too large

Model 1 (void)

Model 2 (individual controls)

Model 3

Model 4

Model 5

Model 6

Gini 2.493

(1.10)

P90/P10 0.151

(1.33)

MDMI 1.451

(1.22)

FGT0 0.0473*

(2.11)

GDP 0.000874 0.00105 0.000568 0.00176

(0.40) (0.49) (0.27) (0.84)

Ex-socialist 0.778*** 0.750*** 0.799*** 0.787***

(3.44) (3.34) (3.53) (3.66)

Intercept 0.364** 1.076*** -0.0357 0.120 0.0601 -0.155

(3.09) (7.60) (-0.05) (0.21) (0.09) (-0.30)

sigma_u 0,618 0,588 0,455 0,450 0,453 0,431

rho 0,104 0,095 0,059 0,058 0,059 0,053

N 25757 21493 20790 20790 20790 20790

N countries 26 26 26 26 26 26

Effect of explanatory variables (ordered logit, average partial effects on the probability of „totally agree”)

Average partial effect St. error

Average partial effect St. Error

Age (ref. cat. 65+ years) 15-24 years -0,0274 0,0143 -0,0509** 0,0183 25-39 years -0,0073 0,0135 -0,0207 0,0154 40-54 years 0,0022 0,0126 0,0023 0,0146 55-64 years 0,0227* 0,0090 0,0294*** 0,0089 Male -0,0233*** 0,0064 -0,0305*** 0,0085 Education (ref. cat: primary education) Secondary 0,0208 0,0157 -0,0002 0,0134 Tertiary -0,0365 0,0206 -0,0570* 0,0227 Settlement type (ref. cat. small settlements) Small town -0,0026 0,0127 -0,0015 0,0151 Large town -0,0066 0,0115 -0,0277 0,0175 Marital status Partner -0,0152 0,0099 -0,0327** 0,0099 Divorced -0,0044 0,0156 -0,0281* 0,0135 Widow -0,0146 0,0175 -0,0567** 0,0177 Hhd. size 0,0179*** 0,0051 0,0151** 0,0049 No. of children -0,0216*** 0,0061 -0,0146* 0,0063 Employment status (ref.cat.unemployed, inactive) Self employed -0,0533*** 0,0130 -0,0707*** 0,0196 Employee -0,0314** 0,0097 -0,0319** 0,0123 Status index -0,0001 0,0016 -0,0011 0,0017 Subjective status (ref.cat. poor) Non-poor, non-rich -0,0980*** 0,0126 -0,0704*** 0,0125 Rich -0,1606*** 0,0159 -0,1532*** 0,0176 Expectations (ref. cat. will improve Will be the same 0,0033 0,0076 0,0093 0,0107 Will get worse 0,0559** 0,0190 0,0456* 0,0194 Contextual variables FGT0 0,0102* 0,0038 GDP 0,0003 0,0003 Ex-socialist 0,1551*** 0,0350

Interaction of cohort&country type

19%20%

21%19% 25% 18%

17% 17%15%

18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

15-24years

25-39years

40-54years

55-64years

65+years

15-24years

25-39years

40-54years

55-64years

65+years

Uncontrolled With controls

Market economy Ex-socialist

Conclusions

• Attitudes to inequality are not very sensitive to inequality in cross-section of countries.

• The poverty rate is the only significant inequality indicator, but it has a weak effect.

• Inhabitants of former socialist countries have a higher aversion to inequality (individuals of same characteristics living in ex-soc. countries more often describe the same level of actual inequality as too large than individuals in market economies).

• Researchers tend to interpret such findings as a lasting effect of socialist ideology and/or of habit of low inequality (socialist legacy hypothesis).

• Our results show that younger cohorts, who were not subject to to socialist indoctrinaton and could not get acustomed to low inequality are just as different from their „western” counterparts as individuals in older cohorts are.

• Consequently, convergence in attitudes to inequality between ex-socialist and market economies is unlikely to happen by cohort replacement.

• Work in progess. Comments welcome!