The Politics of Income Inequality and Wealth

Rank

A scale of achievement and the placement on that scale.

Does class and attitudes on class impact policy-making decisions? How do attitudes on the rich and poor play an essential role in this? How are class attitudes measured and are they good measures? Across time, compared to other measures of similar attitudes?

Rich people tend to have more of a voice in policy matters, and politicians tend to listen to them more than poorer constituents. The highest indicator of success in a political race is how much money was spent on the campaign. Cohort studies over time are a better measure because it observes attitudes from the same groups of people. Usually, data of political attitudes can be open-ended and are from election surveys.

"motherhood penalty"

pushes women into the informal economy, casual and part-time work, and tends to be larger in "developing" countries than in "developed" countries.

The Parade of Dwarfs

"Jan Pen's Parade of Dwarfs is one of the most persuasive and attractive visual aids in the subject of income distribution." Assumption: Everyone in the population has a height proportional to their own income. average income = average height. Divide total income by total population: this gives average or mean income Frequency Distributions (Fence Example)

Subjective Measures

"Needs based" - Meaning that it is dynamic, or in other words, it means different things to different people and groups.

Disposal/Net Income

"Take home" pay; or what an individual/family has available to spend. Income minus taxes and other "voluntary" deducted payments from your paycheck.

Poverty Line

"The official poverty line, formulated in 1964 by the Social Security Administration, was drawn by combining a set of rock-bottom food allowances (i.e. cheapest costs of feeding a given family yearly) with estimated proportions of yearly family income directed to food purchasing" "three times the cost of a minimum diet in 1963" then adjusted for inflation. Note: A diet intended to maintain an individual through temporary or emergency times rather than daily living. $27,479 in 2021.

From our guest lecture with Dr. Zhao, what are some of the ways the income gap began to form within the Asian American community?

(1) With the Filipino community- they were not as thwarted because the route to citizenship is easier, compared to the Chinese, etc- with the Chinese exclusion act. (2) The Japanese internment camps- wealth was liquified (3) The Chinese when they worked on the railroad were paid less, and there were working disparities. (4) H-1B Visas are still used to overwork minorities today.

Deciles

10%.

Quintiles

20% Quantiles are points in a distribution that relates to the rank order of values in that distribution

Income

A flow of accessible resources measured through time. Broader than pay or earnings. In addition to earnings, income includes items such as dividends, interest, royalties, realized capital gains rental income, and transfer payments from the government (i.e. government benefits). In most countries, this is "what you report with taxes"

What is Resentment for the Rich

A political attitude is defined by the feeling that (1) the wealth of the rich is undeserved (2) the rich should not have as much wealth- a feeling of injustice and hostility because one group has an advantage over other groups

The 6 Most Common Measurements of Poverty

Absolute Poverty Relative Poverty Official Poverty Subjective Measures Hardship Indicators Social Exclusion

Absolute Poverty

Also called "extreme poverty" Refers to the inability to sustain oneself. Needs based" measure (see explanation below). UN absolute poverty calculation: $683.99 or $1.90

Official Poverty

Also called "federal poverty" Measure of relative poverty

Occupational Segregation

As the percentage of women employed in lowest-wage occupations increases, the gender poverty gap increases. This is one of the is the primary determinant of the gender poverty gap in the largest U.S. cities. Traditional policies have been focused on promoting family marriage to help relieve poverty, but they focused less on policies that would help single-mother families, like minimum wage increases.

Citizenship

At its core, it is membership to a hierarchy of entitlements to common goods and protections such as social insurance and health care.

Hardship Indicators

Based upon life circumstances, used to highlight human wellbeing in measures.

Pay inequality

Different pay rates in different jobs and the structural differences between jobs that are available in different communities and societies. EASY TO MEASURE

What is Downward Redistribution

Downward redistribution is usually classified as tax policies that benefit the lower classes, taking more marginal tax away from the upper classes.

What is the relationship between democracies, freedom, and inequality? (from: Fukuyama, Francis. "Poverty, Inequality, and Democracy: Dealing with Inequality.")

Extreme levels of inequality are bad for liberal democracy, usually, because they can lead to dissatisfaction of the populous- bad for legitimacy- or large economic inequalities can lead to a dysfunction of economics (the lack of educated and skilled workers). Focusing too much on social welfare and regulating inequality may lead have drawbacks for democracy and economic growth. Inequality will always exist, but extreme inequalities can be and should be, regulated. Rawls: View of ignorance- a theoretical approach to thinking about inequality- everyone at a point of poverty, will believe inequality is bad. Marx: Puts socioeconomic equality as the paramount value- freedom less on the scale. Friedrich A. Hayek: preservation of a 'free society.' Sen: There ought to be the right of the preconditions of equality- equality of opportunity needed for democracy. The pursuit of democracy, freedom, and equality create tension at the expense of one another.

What is Sympathy for the poor

Feeling that the situation of the poor is (1) undeserved, (2) and it involves empathetic concern.

The Lorenz Curve

Graphical picture of income/wealth distribution in a population of interest. Graphs the percentiles a given population against cumulative income or wealth of people at or below that percentile. Why do we use it? Visually depicts inequality across a population in a manner easy to understand and analyze

Different directions of Mobility (Social Mobility)

Horizontal: different positions- changing jobs that make the same money. Vertical: moving up the socioeconomic latter. Downward: moving down the socioeconomic latter.

"fatherhood bonus"

Men, by contrast, do not suffer a penalty when they become dads. In fact, there's some evidence of a "fatherhood bonus" in which their earnings actually increase."

What is the range of a distribution?

Inner-quartile range: drop the tails at 25%

Wealth distribution

List of all households according to their total wealth that reveals the percentage of households at various wealth levels

Income distribution

List of all individuals according to their total income that reveals the percentage of people at various income levels.

Adeola. Racial and class divergence in public attitudes and perceptions about poverty in USA: An empirical study

Main Question: How does the American public perceive the problem of poverty and the characteristics of the poor across racial groups? There have been growing disparities in poverty between races, genders, and immigrants. Poverty since 2000 has increased substantially. There is an exacerbation of poverty among single mothers. The South is the most hard-hit region by poverty. How society responds to poverty and related issues is primarily conditioned by its public attitudes toward the poor and people's perceptions of the root cause of the problem. The American attitude, that focuses on individualism often has a poor reflection on social welfare programs and impacts public onions on the poor. Affluent white Americans are more apt to blame the less fortunate and the poor for not doing enough to help themselves than any other racial group- looking at poor character flaws- and individualistic and culture of poverty theories. Theories of poverty: (1) Genetics- mental characteristics and traits explain poverty- it looks to junk sciences like IQ. Poverty is transmitted through generations. (2) Culture of poverty: the poor form a unique subculture with a set of values, attitudes, norms, and patterns of behaviors that perpetuates the condition of poverty. This includes dependence, helplessness, loose moral conduct, and low aspirations. (3) Psycho-Social Perspective- an individual's lack of achievement and orientation as a result of dysfunctional personality traits mostly acquired through socialization- lack of interpersonal relation, laziness, low motivation, and bad habits. (4) Human capital- the process of investment in education, knowledge, experiences, and health that enhances an individual's capabilities to become competitive in the labor market. Higher investment creates a lower risk to poverty. (5) Structural Perspective- aspects that are beyond someone's control. Because of a changing economy, social structures, etc, the poor have limited opportunities to get out of poverty- failures of the U.S. The data of the study are from multiple public surveys. Findings: (1) Minorities found that government spending on the poor was too little. (2) Affluent respondents blamed personal inadequacy for the cause of poverty, and low-income people cited structural factors- like bills, jobs, and children. Both groups believe education could be better- supporting human capital theory. (3) Black people noted structural issues attributed to poverty, while white people focused on individual attributes. (4) White people attributed other whites as hard-working and better off. Blacks were perceived as poor and lazy by white people, but with moderate intelligence.

Michener/Bower What's Race Got to do With it?

Main question: How do public policies related to racial inequalities in economic positions among women? Women of color, specifically Black and Latina women have disparities in the realm of educational attainment, rates of reemployment, rates of pay and earnings, and high rates of poverty. Social and economic policies are heterogeneous- they do not have the same benefits and relationships with the economic positions of women across races and ethnicities. White women are more likely to gain certain benefits, like TANF, compared to their Latina and Black counterparts. It is important to study public policy in order to understand how social and economic policies should be conducted, and the possible exaggerated inequalities it may create, unintentionally. It is important to study public policy because (1) it can benefit certain groups and reduce inequalities (2) it can create more inequalities- for example, minority populations are less likely to gain social security disability benefits than white counterparts. (3) if affects and reflects democracy- it shows the health of our democracy and increasing inequalities can hurt our democracy. The article highlights whether the type or generosity of benefits at the state level correlates with individual-level economic status. (1) TANF is correlated with the economic status of white-employed women. (2) WIC is less correlated with employed Latina women. (3) EITC has a stronger relationship with Black and white women (4) public health care is correlated more with Latina women. Though Black and Latina women share similar disadvantages- socioeconomic statuses- policies are heterogeneous across racial groups.

Market Income

Market income is Income gained from market activities, minus government funded subsidies and benefits.

Quality of Life

Measure of "happiness" associated with job and life satisfaction.

How do attitudes about class impact vote choice for candidates?

Overall, any candidate who is seen to help the poor or has sympathy for the poor does better than those who are perceived to hurt the poor.

Living Wage

Refers to the compiling of geographically specific expenditure data for food, childcare, health care, housing, transportation, and other necessities to calculate the income needed meet a family's basic needs.

Income Inequality

Refers to the differences and unequal distribution of income across groups. SOMEWHAT EASY TO MEASURE

Wealth Inequality

Refers to the differences and unequal distribution of wealth across groups. HARDER TO MEASURE

Social Differentiation

Refers to the fact that people are not the same within a society (this can come in the form of more visible as well as more innate and internal differences).

What are various forms of inequality?

Pay Income Wealth Household and Familial Gender Sex Sexual orientation Race Ethnicity Religious Age

What is the relationship between resentment for the rich, sympathy for the poor, and perceptions of downward redistribution?

People who believed in downward distributions tended to have sympathy for the poor and resentment for the rich. People who have sympathy for the poor tend to favor downward distribution, along with resentment for the rich. Overall, across parties, the American people prefer candidates who are seen to help the poor rather than hurt the poor.

Political Knowledge and its effect on class attitudes and their impact on political opinions.

People with higher political knowledge have stronger opinions of political issues. For example, people voted against the death tax, but not the estate tax. People have different opinions about a subject when they know more- when they know how it affects the class. Knowledge is the activator for political attitudes.

How do gender and race impact income inequality, policies toward addressing inequality, and perceptions of poverty? What about education?

Perceptions of poverty are different depending on how the roots of poverty are viewed. Black respondents tend to think of the issue as a structural problem, while white respondents tend to think of it as a character and cultural reason. This is tied much to attitudes regarding class and the root causes of poverty. Due to immigration policies, and the lack of generational wealth, minority Americans, besides Asian Americans, on average, make less than White Americans. Women make less than men, in the United States 83.1% of what males make in the U.S. Women are the highest gender proportion in poverty. Women, at least in urban areas, tend to work in the lowest-wage occupations. The vast majority of minimum wage income earners are women, around 2/3rds. This is referred to as occupational segregation. They cannot live at the poverty line and raise a family. There has been little done to raise the lowest wages. The policy is vital for producing and reducing inequality- what policies have we done to address gaps and poverty? Raising wages or trying to reconcile family relationships- politics to promote marriages. The most effective measures have been earned Income Tax Credit acts, while minimum wage has not increased.

How do politicians respond to the poor?

Politicians, on average, tend to not be as responsive to poor constituents. Also, the poor have less outlets to shape political opinions- less social status. Wealthier citizens generally have a higher propensity to vote (MORE ACCESS), contact public officials, volunteer for campaigns, write letters, attend protests, and donate money to candidates.

Inequality and Structured Inequality

Refers to the fact that there are inevitable disparities in people's positions in social and economic rankings. Refers to the fact that inequality is not arbitrary, and instead tends to be systematic.

Social Stratification

Refers to the rank ordering of people based upon social and economic traits

Equal Opportunity

Refers to an adult's economic destination should not be predetermined by his/her social or economic class origin.

Inequality of Opportunity

Refers to disparities in access to important resources such as educational and occupational resources, usually in reference to early-life opportunities that establish life-long access or avenues for success.

Inequality of Condition

Refers to disparities in the resources, power, and prestige that people or groups have. Usually, people mean inequality of condition when discussing inequality

Class, Social Class (Elites, Middle Class, and Lower Class)

Refers to groups of people with similar education, income, wealth, occupation, and prestige. Elite or Upper Class: those that occupy most fortunate positions.Elite usually means those who control financial/institutional/informational resources. Middle and Working Classes: Groups with similar jobs and similar control over resources. The working class tends to typically have less skilled jobs, requiring usually less education, and generating less income. Lower class: Those living in poverty, and have a low rank on most metrics of inequality.

Social Exclusion

Refers to poverty being a political and social situation that causes the exclusion of poor from full society. Impacts life "chances"

Relative Poverty

Refers to the comparison of people on a distribution of resources, then defines the poor as those falling below the average income threshold for the economy. Example: NYC average income $66,760. Using 50% of median annual income = $33,350. (and is 13k if using official poverty threshold)

Financial Wealth

Similar to wealth, but is the value of only liquid assets.

Pay or Earnings

Terms that refer to compensation for work.

Gini Coefficient or Gini Index

The Gini index is a measure of the distribution of income across a population. Measurement of economic inequality. The Gini coefficient ranges from 0 to 1. 0 is perfect Equality; 1 is perfect inequality. equal to the area below the line of perfect equality (dashed line) minus the area below the Lorenz curve, divided by the area below the line of perfect equality.

Review your notes from Piston book; Class attitudes in America

The bookargues that Resentment for the Rich, and Sympathy for the Poor are the key underlying attitude structures/divisions at play in impacting evaluations of political issues and class. Resentment for the Rich, and Sympathy for the Poor both seem to play an important role in influencing how Americans think about policy. Political knowledge is a large indicator for opinions on policy. • When class implications of public policy are spelled out for ordinary Americans, sympathy and resentment play key role in political preferences and political calculations. How politicians frame issues is a paramount political agenda that changes class attitudes.

Cumulative Frequency Distribution?

The cumulative frequency is calculated by adding each frequency from a frequency distribution table to the sum of its predecessor

What is a Frequency Distribution?

The frequency distribution is like a bar graph, how common it is that an event/characteristic occurs.

Standard of Living

The material "well being" of the average person in a population of interest. Usually includes income, GDP (usually how it is measured), life expectancy, and opportunity

Poverty

The state in which people (communities) lack the economic resources and essentials necessary for a minimum standard of living.

Wealth

The value placed on a collection of possessions or assets held by a person or household. This includes liquid financial assets, as well as assets that can be liquidated but are not currently, and future and current income sources. Intended to understand the gap between the "rich" and the "poor."

Poverty Threshold

They are the dollar amounts used to determine poverty status. The Census Bureau assigns each person or family one out of 48 possible poverty threshold, based on family size and dependents.

Socioeconomic Status

Usually used interchangeably with class but has slightly different meaning. Refers to a value (numerical usually) calculated with the following: income, wealth, occupational prestige, and education level. Considered an objective way to measure or categorize people into groups. (there are also subjective and reputational methods for identifying class).

What is the relationship between tax policies, tax reforms during various presidential administrations, and income inequality?

Wartime economics in 1945 led to higher capital gains tax, which lowered the proportion of the income of the top 10%. Between 1945 and 1985 there were higher tax rates, leading to lower wealth inequalities. Then in 1986, Regan introduced tax cuts for wealthy Americans with tax reforms. Since then, socioeconomic inequality has been growing in the U.S. with the top earnings sharing a larger proportion of wealth. We have more inequality than in the gilded age. Though after WWII the economy surged again, capital gain taxes remained high, and stayed this way, until the tax reform act.

Percentiles

a general way of showcasing percentiles.

What is a distribution

a plot which puts a variable of interest (income) on the x axis, and the number of observations on the y axis.

What does Redistribution mean? What about Coercive Redistribution?

the distribution of something in a different way, typically to achieve greater social equality. Coercive redistribution is taking away wealth without consent- not done through democratic processes. "the transfer of income and wealth (including physical property) from some individuals to others by means of a social mechanism such as taxation, charity, welfare, public services, land reform, monetary policies, confiscation, divorce or tort law."