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The Polarization of Reality † AEA Papers and Proceedings 2020, 110: 324–328 https://doi.org/10.1257/pandp.20201072 The Polarization of Reality † By Alberto Alesina, Armando Miano, and Stefanie Stantcheva* Evidence is growing that Americans are voters have been illustrated in the political sci- polarized not only in their views on policy issues ence literature. Bartels 2002 shows that party and attitudes toward government and society identification shapes (perception) of economic but also in their perceptions of the same factual indicators that can be seen as the government’s reality. In this paper, we conceptualize how to “performance indicators” e.g., unemployment think about the polarization of reality and review or inflation , with Republicans( being more opti- recent papers that show that Republicans and mistic than) Democrats on economic variables Democrats as well as Trump and non-Trump during the Reagan presidency.1 Similar results voters since (2016 view the same reality through about the importance of partisan assessment a different lens. Perhaps) as a result, they hold of the government’s performance in shaping different views about policies and what should perceptions of economic indicators is found in be done to address different economic and social Conover, Feldman, and Knight 1987 . More issues. recently, Jerit and Barabas 2012( shows) that The direction of causality is unclear. On the people perceive the same reality( in a) way consis- one hand, individuals could select into political tent with their political views and that learning affiliations on the basis of their perceptions of is selective: partisans have higher knowledge reality. On the other hand, political affiliation for facts that corroborate their world views and affects the information one receives, the groups lower knowledge of facts that challenge them. with which one interacts, and the media to Heterogeneous updating to identical infor- which one is exposed, all of which can shape mation is also shown for attitudes toward the perceptions of reality. Regardless of the direc- Iraq War in Gaines et al. 2007 . Prior, Sood, tion of causality, though, this is not about hav- and Khanna 2015 and Bullock( ) et al. 2015 ing different attitudes about economic or social demonstrate that( people) give “partisan” answers( ) phenomena or policies that could justifiably be to factual questions in surveys, but the partisan viewed differently from different angles. What gap is reduced if monetary incentives are offered is striking, rather, is to have different percep- for correct answers. tions of realities that can be factually checked. We highlight evidence about differences in I. Conceptual Framework perceptions across the political spectrum on social mobility, inequality, immigration, and A simple conceptual framework can help public policies. We also show that providing organize the empirical results reviewed for the information leads to different reassessments of full-fledged model, see Stantcheva 2019( . It is reality and different responses along the policy illustrated in Figure 1. ) support margin, depending on one’s political People can hold many “perceptions,” which leaning. are estimates of true parameters on a variety of topics such as the share of immigrants, the share Earlier Literature.—Some differences in per- of national income going to the top 1 percent, ceptions between Republican and Democratic or the elasticity of top incomes to top tax rates. These perceptions have true empirical counter- * Alesina: Harvard University, CEPR, IGIER, and NBER parts. “Policy views” are formed as functions email: [email protected] ; Miano: Harvard University of these perceptions and can range from the (email: [email protected]) ; Stantcheva: Harvard University,( CEPR, and NBER ) email: sstantcheva@fas. harvard.edu . ( † Go to https://doi.org/10.1257/pandp.20201072) to visit 1 For instance, in 1988, Democrats were more likely to the article page for additional materials and author disclo- report that unemployment and inflation had increased since sure statement s . 1980, when the opposite was true. ( ) 324 VOL. 110 THE POLARIZATION OF REALITY 325 means that the weight and updating for an iden- Signals tical signal will depend on all prior perceptions. Information A signal can move more than one perception at the same time. The weight on the signal is endogenous to perceptions as also indicated by Weighted ( ( ) an arrow in the figure because it could depend on its assessed reliability,) which is yet another perception held by people. Perceptions Second, imagine information is costly to acquire. Then, in addition to the interaction among existing perceptions and updating just described, the set of signals acquired is also P P P endogenous to perceptions as indicated again 1 ⇄ 2 .… N by an arrow in the figure(. People have to decide which information to) incur costs for, which will depend on their baseline perceptions. Below, we describe how people with differ- Policy views ent baseline perceptions indeed have different willingness-to-pay for information. Figure 1. From Information to Policy Views What makes learning particularly difficult in this setting is that the actual true values of the variables that people form perceptions about desired top tax rate to the ideal level of govern- either change over time e.g., the share of immi- ment intervention. Perceptions interact with one grants or are difficult( to estimate, even for another: each policy view can be a function of experts) e.g., the elasticity of unemployment to several or all perceptions. For instance, as we unemployment( benefits . will see below, a given perceived level of social Finally, while behavioral) features could also mobility will translate into different support for play a role, there is no need to suppose that if redistribution based on people’s perceptions people had the exact same vector of perceptions of the competence and trustworthiness of the there would be disagreement on policy views government.2 or updating i.e., willful ignorance or partisan How perceptions are determined depends on bias per se in( the shape of the function mapping how learning occurs. People receive “signals,” perceptions to policy views . As long as people which are pieces of information and which are have a whole set of heterogeneous) perceptions, weighted in order to be translated into a change there will be completely different policy views, in perceptions. Signals do not have homoge- and any signal will be rationally acquired and neous impacts on all people’s perceptions, and weighted on the basis (of the full )set of percep- not all people receive the same signals. People tions, which leads to different updating pro- may thus end up with very heterogeneous per- cesses as well. ceptions and misperceptions. First, suppose that information and signals are II. The American Dream costless. Even entirely rational updating rules will depend on the prior level of possibly, all Is the American dream alive? The answer perceptions, as well as on the weight( placed on) people give to this question turns out to be a the signal. The interaction among perceptions key determinant of support for redistribution. If perceived social or intergenerational mobil- ity is high, the resulting inequalities in income 2 In addition, some perceptions may put consistency and wealth are perceived as more fair, since it is constraints on others. For instance, one cannot simultane- thought that everyone had more equal opportu- ously believe that all immigrants are unemployed and that nities with which to start. one’s sector’s jobs are mostly taken by immigrants. This could be called “Schrödinger’s” immigrant, and we do not Using detailed surveys on several thou- need to rely on such mental models to rationalize the results sand respondents, Alesina, Stantcheva, presented. and Teso 2018 investigates perceptions about ( ) 326 AEA PAPERS AND PROCEEDINGS MAY 2020 intergenerational mobility in the United States Panel A. Mobility perceptions and Europe. The authors show that not only are Percent Americans more optimistic about social mobil- Perceived probability 10 20 30 for child from bottom ity than Europeans, but they are overly optimis- quintile to... 10.5 tic given reality: they overestimate the chances ...move to the top quintile 7.8 12.0 37.4 of making it from the bottom to the top—that is, ...remain in the bottom a child born in the bottom quintile making it to quintile 29.5 33.1 19.3 the top quintile. ...move to the third quintile 18.7 24.1 Perceptions of social mobility are correlated with political orientation. Americans who iden- Panel B. Inequality perceptions tify themselves as conservative i.e., right-wing ( ) Has income inequality on economic issues believe that the probability increased in US 77.6 in recent decades? that a child born in the bottom quintile makes 61.3 Were top income 59.5 it to the top is 12 percent; liberals left-wing tax rates higher in respondents believe that it is 10.5 percent.( Thus,) 1950s−60s than today? 46.7 Was economic growth 46.5 both groups overestimate the correct answer, faster in 1933−1980 36.6 than in 1980−2010? which is 7.8 percent, implying that belief in the 40% 50% 60% 70% strongest form of the “American dream”—mak- ing it from rags to riches—is still relatively prev- Share answering yes alent. However, perceptions about the chances Democrats liberals / of making it out of poverty and into the mid- Republicans conservatives / dle class are very different across the political Reality spectrum, as illustrated in panel A of Figure 2. The perceived probability that a child born in the bottom quintile remains in that quintile as an Figure 2. Differences in Perceptions across the adult is 37.4 percent for left-wing respondents Political Spectrum and 29.5 percent for right-wing respondents the ( Note: The lines are 95 percent confidence intervals around correct number is 33.1 percent .
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