Economic and Social-Class Voting in a Model of Redistribution with Social Concerns

Abstract

We investigate how social status concerns may affect voters’ preferences for redistribution. Social status is given by a voter’s relative standing in two dimensions: consumption and social class. By affecting the distribution of consumption levels, redistribution modifies the weights attached to the two dimensions. Thus, redistribution not only transfers resources from the rich to the poor, but it also amplifies or reduces the importance of social class differences. Social status concerns can simultaneously lead some members of the working class to oppose redistribution and some members of the socioeconomic elites to favor it. They also give rise to interclass coalitions of voters that, despite having different monetary interests, support the same tax rate. We characterize these coalitions and discuss the resulting political equilibrium.

A Model of Educational Investment, Social Concerns, and Inequality

“…Such an approach (commonly referred to as "keeping up with the Joneses") has a long tradition in the literature (Duesenberry, 1949;Pollak, 1976). More recently, it has been used to study the relations between wealth and growth (Harbaugh, 1996;Futagamia and Shibata, 1998;Corneo and Jeanne, 2001) and inequality and happiness (Hopkins, 2008), or to model social concerns about income and social class (Clark and Oswald, 1996;Gallice and Grillo, 2018).…”

Social status, preferences for redistribution and optimal taxation: a survey

“…A paper that accounts for both patterns, and 5 Kim (2018) instead rationalizes the economic conservatism of the poor in a model in which agents have (ordinal) positional concerns on consumption, they display last-place aversion (i.e., the disutility they experience in moving from position k to position k + 1 in the ranking is strictly increasing in k; see Kuziemko et al (2014)), and their labor productivity gets slightly perturbed by the introduction of new tax policies. it is therefore able to simultaneously rationalize both deviations from pure economic voting, is Gallice and Grillo (2018a). Gallice and Grillo (2018a) introduce a model in which agents are heterogeneous in two dimensions: productivity and social class.…”

“…it is therefore able to simultaneously rationalize both deviations from pure economic voting, is Gallice and Grillo (2018a). Gallice and Grillo (2018a) introduce a model in which agents are heterogeneous in two dimensions: productivity and social class. Productivity determines an agent's gross income.…”

“…Examples of these factors include the agent's educational and cultural level and the social network that he inherits from his family. Gallice and Grillo (2018a) then define social status as a weighted average of the agent's relative standing in the distributions of consumption and social class. The authors adopt a cardinal formulation of status (which in their model is a multidimensional attribute) because individuals get extra utility (disutility) that is proportional to the positive (negative) distance between the agent's attributes and the average values in the population.…”

“…In particular, a high level of redistribution makes consumption less salient (and therefore simultaneously increases the weight attached to social class) since differences across agents in that dimension will be less pronounced. Gallice and Grillo (2018a) characterize the coalitions of heterogeneous voters that support any specific tax rate and show that, as status concerns become more relevant, individual preferences for redistribution become more polarized.…”