“Fair” Inequality? Attitudes Toward Pay Differentials: the United States in Comparative Perspective

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“Fair” Inequality? Attitudes Toward Pay Differentials: the United States in Comparative Perspective #2855-ASR 71:3 filename:71305-Osberg “Fair” Inequality? Attitudes toward Pay Differentials: The United States in Comparative Perspective Lars Osberg Timothy Smeeding Dalhousie University Syracuse University Are American attitudes toward economic inequality different from those in other countries? One tradition in sociology suggests American “exceptionalism,” while another argues for convergence across nations in social norms, such as attitudes toward inequality. This article uses International Social Survey Program (ISSP) microdata to compare attitudes in different countries toward what individuals in specific occupations “do earn” and what they “should earn,” and to distinguish value preferences for more egalitarian outcomes from other confounding attitudes and perceptions. The authors suggest a method for summarizing individual preferences for the leveling of earnings and use kernel density estimates to describe and compare the distribution of individual preferences over time and cross-nationally. They find that subjective estimates of inequality in pay diverge substantially from actual data, and that although Americans do not, on the average, have different preferences for aggregate (in)equality, there is evidence for: 1. Less awareness concerning the extent of inequality at the top of the income distribution in America 2. More polarization in attitudes among Americans 3. Similar preferences for “leveling down” at the top of the earnings distribution in the United States, but also 4. Less concern for reducing differentials at the bottom of the distribution. re American attitudes toward economic alized nations, and that federal and state gov- Ainequality different from those found else- ernments in the U.S. do less to reduce the where, and if so, in what ways? It is widely rec- inequality of economic outcomes than do the ognized that economic inequality in the United governments of other countries.1 One hypoth- States is greater than in other affluent industri- esis is that this is what Americans want – that Americans have different attitudes toward inequality and redistribution than do the citizens Direct correspondence to Lars Osberg, Department of other countries, and that government of Economics, Dalhousie University, 6214 University (in)action therefore reflects the preferences of Avenue, Halifax, Nova Scotia, Canada (Lars. 2 [email protected]). Supported by the Russell Sage the electorate. However, Kelley and Evans Foundation. The authors thank the ASR editor and (1993), Kerr (1983), Kluegel, Mason, and anonymous referees for their comments. Participants at the Russell Sage Workshops on Inequality March 21, 2003 and May 21, 2004; the seminars at Yale, 1 For a detailed discussion see Osberg, Harvard, and Syracuse Universities; and Christopher Smeeding, and Schwabish (2004), Smeeding Jencks, Stephen Jenkins, Leslie McCall, John Myles, (2005), and the references therein. Förster and Shelley Phipps, Jeff Racine, and John Roemer have d’Ercole (2005) provide recent international notably improved the article. The authors also thank comparisons of inequality. Kim Desmond, Lihui Zhang, Zhouran Zhou, Laura 2 In the economics literature, Alesina and Turner, Kim Tran, Andrea Johnson, Nan Geng, Mary Angeletos (2005), Alesina, Di Tella, and MacCulloch Santy, Kati Foley, and Lynn Lethbridge for their (2001), Alesina and La Ferrara (2001), Bénabou and excellent work with the data and manuscript. Tirole (forthcoming), Glaeser (2005), and Piketty AMERICAN SOCIOLOGICAL REVIEW, 2006, VOL. 71 (June:450–473) #2855-ASR 71:3 filename:71305-Osberg ATTITUDES TOWARD ECONOMIC INEQUALITY—–451 Wegener (1995a), and Wilensky (2002) are lic opinion, we find little evidence for American among those who have argued the alternative exceptionalism in average attitudes. hypothesis: that Americans are not particularly However, “inequality” can be interpreted in different from the citizens of other affluent terms of income ratios or income shares. industrialized nations in social preferences for Individuals’ value-based attitudes toward economic equity and the reduction of econom- inequality (i.e., how much inequality respon- ic inequality. If so, then the explanation for dif- dents think would be “fair”) also are condi- ferences in economic, social, and policy tioned on their personal cognitive estimates of outcomes may perhaps be found in American the extent of inequality (i.e., how much inequal- attitudes toward government as an agent of dis- ity individuals believe actually exists). This arti- tributional change or in differences in the insti- cle begins, therefore, by discussing the tutional structure of American politics. But the conceptualization of “inequality.” It argues that prior question is whether, or how, American the battery of ISSP questions on what individ- attitudes toward economic inequality differ from uals in specific occupations “do earn” and what attitudes elsewhere. they “should earn” offer a particularly focused An international comparison of American way of distinguishing between individual value attitudes toward economic inequality faces, preferences for more egalitarian outcomes and however, three important challenges: other confounding attitudes and perceptions. Average attitudes toward aggregate inequality, 1. Distinguishing attitudes toward inequality of eco- nomic outcomes from beliefs about process equi- as summarized by the Gini index of “should ty or inequality of opportunity earn” inequality from the ISSP data, indicate 2. Clarifying what respondents may understand the that the United States is not particularly differ- meaning of “economic inequality” to be ent from other nations. To find differences 3. Summarizing the distribution of attitudes toward between the United States and other nations in economic inequality in the population. attitudes toward inequality of pay one must Historically, discussion of “American excep- therefore probe deeper and examine both atti- tionalism” (e.g. Lipset, 1996) often has empha- tudes toward inequality in different parts of the sized a presumed American belief in the income distribution and the range of individu- als’ attitudes toward inequality. ideology of mobility and opportunity, a refrain Because a seemingly simple summary term that recently has been reiterated by a number of such as “inequality” melds together perceptions authors in economics (e.g., Bénabou and Tirole, of income differences between the top and the forthcoming). This article starts by reviewing middle of the income distribution, attitudes briefly some of the sociology literature on these toward the gap between the middle classes and topics and by examining simple summary sta- the poor, and preferences for a general leveling tistics on American attitudes toward inequality of pay, this article disaggregates inequality of outcomes and the evidence for a presumed across the distribution. It examines average greater American belief in the prevalence of national perceptions of the maximum and min- equality of opportunity. Using the International imum that people “should earn” and “do earn” Social Survey Program (ISSP)3 surveys of pub- and finds some evidence that American respon- (1995) have discussed possible differences in attitudes dents are, on average, particularly likely to toward inequality in the United States, often in the underestimate the extent of top-end inequality. context of presumed differences in attitudes toward Furthermore, people disagree—sometimes economic mobility. This literature typically makes no quite vehemently—about inequality. The ongo- reference to the International Social Justice Project ing political debates on inequality within coun- or other sociological research that directly examines tries provide direct evidence of heterogeneity in attitudes. For example, Kelley and Evans (1993) and attitudes toward inequality. However, these Kluegel et al. (1995b) cannot be found in the bibli- internal disagreements are obscured when inter- ography of any of the aforementioned papers. 3 Since 1983 the International Social Survey national comparisons rely on average or medi- Program (ISSP) has coordinated the design of cross- an scores to summarize cross-national national surveys covering a variety of social science differences. This article therefore uses kernel topics. Full details are available at http://www.gesis. density methods to describe graphically the dis- org/en/data_service/issp/. tribution of individual preferences for equality #2855-ASR 71:3 filename:71305-Osberg 452—–AMERICAN SOCIOLOGICAL REVIEW in different countries, and shows that an impor- has produced significant socialist or social dem- tant difference between the United States and ocratic parties that have had the reduction of other countries is the bimodal distribution of socioeconomic inequalities as their major objec- American preferences for leveling. tive. Why has the United States been different? Although it is hard to find support for the Authors such as Lipset (1996) and, earlier, hypothesis of systematically different prefer- Lipset and Bendix (1959) have argued that the ences, on the average, for aggregate (in)equal- difference lies in distinctively American beliefs ity in the United States, there is evidence for about, and the reality of, greater socioeconom- 1. Greater underestimation of the size of top-end ic mobility. Belief in the promise of future suc- income differences in the United States cess, either for oneself or one’s children, is said 2. More polarization in attitudes among Americans to dominate any
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