Aversion to inequality fosters support for redistributive policies, study finds

As income inequality widens, debates around redistributive policies are intensifying. A new study from the universities of Zurich, Lille and Copenhagen reveals that support for such policies stems not only from individuals’ financial circumstances, but also from an intrinsic aversion to inequality.

This discovery, published in an article in the Proceedings of the National Academy of Sciencesprovides valuable information for predicting public support for future redistributive policies.

Traditional economic theories assume that individuals only care about their own income when it comes to supporting redistributive policies. An international team of researchers from the University of Zurich (UZH), the University of Lille and the University of Copenhagen is now challenging this view.

The results of their study show that citizens’ preferences towards inequality play a major role. “By taking into account citizens’ degree of aversion to inequality, we can better predict who will support policies aimed at reducing income gaps,” says Ernst Fehr, corresponding author and director of the UBS Center for Social Economics at the Department of Economics at UZH.

Attitudes towards inequality vary

Individuals’ aversion to inequality comes in two forms: some people dislike being worse off than others, known as “disadvantageous inequality aversion,” while others dislike the existence of poorer individuals, known as “advantageous inequality aversion.” These attitudes vary considerably across individuals, and understanding of how these preferences shape political support for redistributive policies remains limited.

In the study of about 9,000 Danish participants aged 20 to 64, the researchers measured individuals’ aversion to inequality using a behavioral experiment.

They then linked the results to individuals’ support for politically imposed income redistribution, that is, policies that reduce income differences, and to charitable giving through actual, documented charitable donations that reveal their private preferences for redistribution.

Inequality aversion influences support for redistribution

“Our empirical results show that people who have a stronger aversion to both advantageous and disadvantageous inequalities are more likely to support political redistribution,” Fehr says.

However, when it comes to charitable giving, those who have a stronger aversion to advantageous inequalities are more generous, while those who have a stronger aversion to disadvantageous inequalities are less generous.

“Our results support the inequality aversion theory which suggests that many people dislike inequality per se, and that this aversion has important economic and political consequences, both at the societal and personal levels,” concludes Ernst Fehr.