Has Income Inequality or Media Fragmentation Increased Political Polarization?

Income Inequality and Political Polarization: Time Series Evidence Over Nine Decades

“…The specific inverted ParetoLorenz coefficient used here describes how unequal the share of income is within the top 10% of 3 Since Senate polarization is more strongly correlated with the share of income inclusive rather than exclusive of capital gains (.52 versus .42), in line with Duca and Saving's (2012a) post WWII results, the two inequality variables used are based on income including capital gains, which outperformed the top 1% share omitting gains. 4 Using measurements based on the Pareto distribution benefits from that distribution's property that the ratio of average income of those with incomes above a threshold y h to the threshold level y h does not depend on y h .…”

“…Increased partisanship in American politics has been attributed to shifting generational attitudes (Strauss and Howe, 1991), cyclical economic conditions (Gelman, et al, 2010;and Pontusson and Rueda, 2008), an increasingly fragmented state of media (e.g., Campante and Hojman, 2010;Davis and Owen, 2008;Duca and Saving, 2012a;Gul and Pesendorfer, 2012;Iyengar and Hahn, 2009;Jamieson and Cappella, 2008, Jones, 2001, and Prior, 2005, and greater income inequality (e.g., Bartels (2008), Feddersen and Gul, 2013;McCarty, Poole, and Rosenthal 2006, forthcoming;and Stiglitz, 2012). 8 The first of these factors is difficult to test with time series data owing to the low frequency of generational shifts, while the tendency of business cycles to reverse implies that economic cycles are unable to account for long-term shifts in polarization.…”

“…Unfortunately, such data are limited to the era of TV and omit large, pre-WWII shifts in income inequality and political polarization. Until a measure of media fragmentation is devised that spans major new sources (i.e., newspapers, radio, and TV), analysis of this factor is limited to post-WWII sample periods (e.g., Duca and Saving, 2012a). Because we focus on a longer time period, our focus in this paper rests squarely on income inequality.…”

“…In a related study, Duca and Saving (2012a) found that media fragmentation had a stronger statistical association with polarization than did income inequality. 2 Furthermore, there are different potential channels for how inequality may induce greater polarization, as well as 1 For more on polarization and macroeconomic implications, see Mian, Sufi, and Trebbi (2012).…”

“…different measures of inequality. Duca and Saving (2012a) Duca and Saving (2012a) also found post-WWII evidence of bi-directional feedbacks between a precise measure of inequality (the Gini coefficient) and polarization, ostensibly reflecting the impacts of inequality on polarization and how shifts in federal policies may affect 1913 1917 1921 1925 1929 1933 1937 1941 1945 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 Rosenthal's (1997, 2007) DWNominate Scores and inequality data of Piketty and Saez (2006), and authors' calculations converting the latter into corresponding biennial values from "Making Sense of the Time Series Links Between Political Polarization and Income Inequality," by John V. Jason Saving, Dallas Fed Working Paper No. 1206, December 2012.…”