Yes, perceptions are the way to go. Though the interesting bit about those is that they are highly inaccurate (as reflections of actual objective inequality or SES position)!
I've read it argued that economic uncertainty plays a role in populist sentiment, but can't recall who wrote about it. The person also made the case that inequality alone didn't explain populism. If people feel their future is lower-income but secure, while others are getting rich, it doesn't have the same effect as if, say, they have no idea if AI or mass migration is going to put them out of a job.
Came to the comments to say this! I remember reading a paper that found that populist right voters were motivated by subjective changes in status e.g. they believed that migrants were higher in the ‘hierarchy’ than they were (even if on objective socioeconomic measures, this was mostly not true). So perhaps there is a relationship with inequality/social democracy but a more complex one than would show up in a straight-forward correlation.
I find it odd that the author titled this article as such, instead of something like "Are perceptions of inequality correlated with wealth inequality data?" Obviously populism is tied to a perception of inequality.
It would also be interesting to see historical data about populism and actual wealth inequality (like leading up to the American progressive era and whatnot).
Interesting write up! However, correct me if I'm wrong, but these studies seem pretty limited to within-country or within-region income inequality measured by gini coefficient specifically. However there are other forms of inequality that might motivate populism:
1. Wealth inequality
2. Inequality between regions within a country (urban-rural inequality, for example)
3. Inequality between the working class and professional-managerial class (I'm not in the weeds on these calculations, and I know gini would pick up on this to some extent, but it is also lumped in with inequality between the tippy top and the rest so gini-based studies might miss this)
Thanks! And that’s an awesome question. In the next couple of days, a big “review-type” paper of mine is going to be published in Theory and Society (https://link.springer.com/journal/11186).
There, I argue that the evidence on inequality causing important social phenomena is typically pretty weak/mixed or null. As an example, we often find a positive correlation between inequality and crime (like homicide), but we don’t have good causal evidence for this, and the size of the correlation that exists is very small in meta-analyses.
How about regional splits by things like pop density?
Like, the conventional narrative about Trumpism is that specific rural regions had spikes in all kinds of bad economic indicators. Also, we can probably also throw in a general association with the South and attitudes descended from the Confederacy and Dixiecrats. OK, so let’s test that! But importantly, we’d have to exclude urban areas. Like, sure, Pittsburgh is not doing GREAT, but compared to its surrounding rurals, I could totally see them being a confounding factor on the whole region’s indicators.
I don’t get it. 1 and 2 seem false — people just need to *believe*, maybe falsely, that inequality is rising, and it seems they do. It’s also made much more salient now due to social media
Also, I would guess populism is mostly driven by *status* inequality, which is less tangible/quantifiable
1 and 2 are false, but to a casual observer (me from the past included) they might seem true. That is, if you go with the “inequality has objectively risen and people are correctly perceiving this and correctly being angry, so inequality is actually driving populist resentment” thesis.
In reality, however, people just believe inequality has risen, even when/where it hasn’t, and they are then incorrectly angry at the world, supporting populists to solve their imaginary problems.
Yes, I also think populism is in large part driven by status inequality — and we have some data to support that (from Mutz, say). Unfortunately, too many scholars and pundits remain incorrectly fixed on “objective inequality” as the key problem behind it all.
Thanks for the article it’s a useful corrective to overly simplistic “inequality causes populism” narratives. I take your point that the empirical evidence is mixed, at least so far as the relationship between the cross-country Gini and populism.
However two questions do come to mind. 1) How does the relationship look for wealth rather than income inequality as wealth can often be a better measure of power and security? 2) Your data is cross-sectional but what people often respond to most politically is change and such changes can often only occur after long time lags. The processes we are discussing here have taken place over decades and even generations. So, what is the relationship between the change in economic inequality (in both income and wealth) and populism? I have been struck by a recent chart produced by Branko Milanovic which shows the change in relative income growth rates in the US both pre and post 1979 and contrast is stark (see below).
More broadly, whilst I accept the validity of the results you present, I remain sceptical of presenting regression-based empirical methods as definitive when evaluating political economies as they risk reducing historically contingent and institutionally embedded processes into isolated statistical relationships. But perhaps that’s another debate!
I have papers on wealth inequality and populism, and those associations are not statistically significant either.
Re: cross-sectional, no not really! I also look at over time change (both with the country-fixed effects estimator as well as by looking at first differences or changes/growth in inequality and populism.
People seem to care more about how the people they went high school with are doing, not Bill Gates or Zuckerberg. Anyway, they have no way to know if inequality has risen or not. Caplan has a good piece on this.
People have systematic biased views on inequality.
Thanks, Andreas, and thanks for doing the awesome work which was actually what inspired me (years back) to start looking at this issue more closely. :)
As a matter of fact, I did read Liberalism and Its Discontents (got it as a birthday gift when it came out). Loved it as well!
I really don't think that many people care about inequality, and those who don't will not choose right-populism, they will choose left-populism which is currently small. People care about themselves not having enough, not about others having too much. But most importantly they care about economic insecurity.
This what neoliberals do not understand well - people would rather have less, but safe, than more but risky. They are not expected-value-optimizers. They rather have the government tariff coal so as they can work as coal miners like their fathers and grandfathers did, than to free up the market, make the country overally richer but themselves potentially unemployed.
Risk-avoidance does not look like a cool trait, but on the other hand, look at the popularity of Tolkien's Shire and hobbit holes. Those imaginary places just ooze complete safety, stability, the lack of any dangerous change, long family trees living in the same home and so on. And that IS in a way cool, lots of people love that.
Human desires are strange and generally do not work well with any homo oeconomicus calculation. We crave both equally irrational things, the utterly safe stillness of the womb, and the very dangerous life of the hero.
Right-populism tends to define the elites as the educated snobbish hoi polloi chattering classes, not as the rich. Cultural mismatch but not big monetary mismatch.
Very interesting - I wonder whether looking at perceptions of inequality (rather than actual inequality) might be more accurate.
Perceptions of high inequality are likely to be much more closely linked to resentment and feelings of unfairness than any real inequality.
Yes, perceptions are the way to go. Though the interesting bit about those is that they are highly inaccurate (as reflections of actual objective inequality or SES position)!
Seems like a bit of a vicious circle, since populists actively cultivate perceptions of inequality!
I've read it argued that economic uncertainty plays a role in populist sentiment, but can't recall who wrote about it. The person also made the case that inequality alone didn't explain populism. If people feel their future is lower-income but secure, while others are getting rich, it doesn't have the same effect as if, say, they have no idea if AI or mass migration is going to put them out of a job.
Came to the comments to say this! I remember reading a paper that found that populist right voters were motivated by subjective changes in status e.g. they believed that migrants were higher in the ‘hierarchy’ than they were (even if on objective socioeconomic measures, this was mostly not true). So perhaps there is a relationship with inequality/social democracy but a more complex one than would show up in a straight-forward correlation.
I find it odd that the author titled this article as such, instead of something like "Are perceptions of inequality correlated with wealth inequality data?" Obviously populism is tied to a perception of inequality.
It would also be interesting to see historical data about populism and actual wealth inequality (like leading up to the American progressive era and whatnot).
Interesting write up! However, correct me if I'm wrong, but these studies seem pretty limited to within-country or within-region income inequality measured by gini coefficient specifically. However there are other forms of inequality that might motivate populism:
1. Wealth inequality
2. Inequality between regions within a country (urban-rural inequality, for example)
3. Inequality between the working class and professional-managerial class (I'm not in the weeds on these calculations, and I know gini would pick up on this to some extent, but it is also lumped in with inequality between the tippy top and the rest so gini-based studies might miss this)
Two of my papers that are coming out are on wealth inequality. Nothing there either!
Yep, the “inequality” between working class/professional-managerial class is somewhat distinct, so that’s an important but separate issue.
Good post! Are there any phenomena of broad social/political interest where we have strong evidence that they are caused by inequality?
Thanks! And that’s an awesome question. In the next couple of days, a big “review-type” paper of mine is going to be published in Theory and Society (https://link.springer.com/journal/11186).
There, I argue that the evidence on inequality causing important social phenomena is typically pretty weak/mixed or null. As an example, we often find a positive correlation between inequality and crime (like homicide), but we don’t have good causal evidence for this, and the size of the correlation that exists is very small in meta-analyses.
Interesting - thanks
Inequality as causal factor in spike in crime is studied from evo psych angle by Margo Wilson and Martin Daly in their book "Killing the competition".
How about regional splits by things like pop density?
Like, the conventional narrative about Trumpism is that specific rural regions had spikes in all kinds of bad economic indicators. Also, we can probably also throw in a general association with the South and attitudes descended from the Confederacy and Dixiecrats. OK, so let’s test that! But importantly, we’d have to exclude urban areas. Like, sure, Pittsburgh is not doing GREAT, but compared to its surrounding rurals, I could totally see them being a confounding factor on the whole region’s indicators.
I don’t get it. 1 and 2 seem false — people just need to *believe*, maybe falsely, that inequality is rising, and it seems they do. It’s also made much more salient now due to social media
Also, I would guess populism is mostly driven by *status* inequality, which is less tangible/quantifiable
1 and 2 are false, but to a casual observer (me from the past included) they might seem true. That is, if you go with the “inequality has objectively risen and people are correctly perceiving this and correctly being angry, so inequality is actually driving populist resentment” thesis.
In reality, however, people just believe inequality has risen, even when/where it hasn’t, and they are then incorrectly angry at the world, supporting populists to solve their imaginary problems.
Yes, I also think populism is in large part driven by status inequality — and we have some data to support that (from Mutz, say). Unfortunately, too many scholars and pundits remain incorrectly fixed on “objective inequality” as the key problem behind it all.
Understood, thanks for clarifying!
Thanks for the article it’s a useful corrective to overly simplistic “inequality causes populism” narratives. I take your point that the empirical evidence is mixed, at least so far as the relationship between the cross-country Gini and populism.
However two questions do come to mind. 1) How does the relationship look for wealth rather than income inequality as wealth can often be a better measure of power and security? 2) Your data is cross-sectional but what people often respond to most politically is change and such changes can often only occur after long time lags. The processes we are discussing here have taken place over decades and even generations. So, what is the relationship between the change in economic inequality (in both income and wealth) and populism? I have been struck by a recent chart produced by Branko Milanovic which shows the change in relative income growth rates in the US both pre and post 1979 and contrast is stark (see below).
More broadly, whilst I accept the validity of the results you present, I remain sceptical of presenting regression-based empirical methods as definitive when evaluating political economies as they risk reducing historically contingent and institutionally embedded processes into isolated statistical relationships. But perhaps that’s another debate!
https://branko2f7.substack.com/p/how-the-virtues-of-neoliberal-globalization?r=20t4v0&utm_medium=ios
I have papers on wealth inequality and populism, and those associations are not statistically significant either.
Re: cross-sectional, no not really! I also look at over time change (both with the country-fixed effects estimator as well as by looking at first differences or changes/growth in inequality and populism.
Has anyone else listened to the audio version of this piece? A rather unfortunate pronunciation in there…
People seem to care more about how the people they went high school with are doing, not Bill Gates or Zuckerberg. Anyway, they have no way to know if inequality has risen or not. Caplan has a good piece on this.
People have systematic biased views on inequality.
https://www.econlib.org/archives/2015/05/systematically_3.html
Good work, as always. Did you also read Liberalism and its discontents? I liked it!
Thanks, Andreas, and thanks for doing the awesome work which was actually what inspired me (years back) to start looking at this issue more closely. :)
As a matter of fact, I did read Liberalism and Its Discontents (got it as a birthday gift when it came out). Loved it as well!
I started that work because I read the same issue of Foreign Affairs that you cite above :-)
I really don't think that many people care about inequality, and those who don't will not choose right-populism, they will choose left-populism which is currently small. People care about themselves not having enough, not about others having too much. But most importantly they care about economic insecurity.
This what neoliberals do not understand well - people would rather have less, but safe, than more but risky. They are not expected-value-optimizers. They rather have the government tariff coal so as they can work as coal miners like their fathers and grandfathers did, than to free up the market, make the country overally richer but themselves potentially unemployed.
Risk-avoidance does not look like a cool trait, but on the other hand, look at the popularity of Tolkien's Shire and hobbit holes. Those imaginary places just ooze complete safety, stability, the lack of any dangerous change, long family trees living in the same home and so on. And that IS in a way cool, lots of people love that.
Human desires are strange and generally do not work well with any homo oeconomicus calculation. We crave both equally irrational things, the utterly safe stillness of the womb, and the very dangerous life of the hero.
Perhaps the driver is not an economic mismatch but a cultural one.
They don't care if people are fantastically richer than them as long as those people care about the same things they do.
Right-populism tends to define the elites as the educated snobbish hoi polloi chattering classes, not as the rich. Cultural mismatch but not big monetary mismatch.
“How did capitalism itself structurally transform political representation, labor, and democracy over decades?”