Wealth Inequality and Democracy

Posted: 15 May 2017

See all articles by Kenneth Scheve

Kenneth Scheve

Stanford University

David Stasavage

New York University (NYU)

Date Written: May 2017

Abstract

What do we know about wealth inequality and democracy? Our review shows that the simple conjectures that democracy produces wealth equality and that wealth inequality leads to democratic failure are not supported by the evidence. Why are democracy and high levels of wealth inequality sustainable together? Three key features of democratic politics can make this outcome possible. When societies are divided along cleavages other than wealth, this can inhibit the adoption of wealth-equalizing policies. Likewise, voter preferences for the redistribution of wealth depend on the beliefs they form about the fairness of these measures, and some voters without wealth may feel that redistribution is unfair. Finally, wealth-equalizing policies may be absent if the democratic process is captured by the rich; however, the evidence explaining when, where, and why capture accounts for variation in wealth inequality is less convincing than is often claimed. This phenomenon is a useful avenue for future research.

Suggested Citation

Scheve, Kenneth F. and Stasavage, David, Wealth Inequality and Democracy (May 2017). Annual Review of Political Science, Vol. 20, pp. 451-468, 2017. Available at SSRN: https://ssrn.com/abstract=2968088 or http://dx.doi.org/10.1146/annurev-polisci-061014-101840

Kenneth F. Scheve (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

David Stasavage

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

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