Rank vs Income

Abstract

We explore the political support for social policies. Voters who become richer do not necessarily behave more like the rich. We argue that income and where people stand relative to others have distinct and sometimes opposing impacts. While income defines peoples’ consumption opportunities, their relative standing defines their status, economic vulnerability, and identification with others. Using data from the US and Norway we show that the rich prefer less redistribution and social insurance than the poor. Yet, an income rise within a given group rank leads to lower political demand for redistribution, but now higher political demand for social insurance.

Keywords: Inequality, redistribution, welfare state