The fact that inequality can cause conflicts and revolutions, undermine social cohesion and threaten macroeconomic stability has been mentioned by many eminent thinkers throughout history, from Aristotle to leading contemporary economists. Indeed, U.S. President Barack Obama used a recent speech to refer to inequality as one of the main challenges to American society.
However, Gimpelson also identifies a different opinion – that, in fact, a number of prominent researchers do not see any convincing evidence that inequality in and of itself can cause social catastrophes such as wars, conflicts, or disputes over wealth redistribution.
The authors suggest that inequality may have negative effects when people perceive it as excessive or unfair. However, the line between excessive and necessary inequality is blurred and exists only in people's subjective perception, which may cause them to see reality very differently from the hard facts supported by economic statistics – examples include actual unemployment and people's fear of it, or real and perceived inflation. Sentiments are often more important than facts in terms of shaping expectations and related behaviours. "In this paper, we examine people's perceptions of inequality, rather than inequality per se as measured by statistical indicators such as the Gini Index or Decile Ratios," says Gimpelson. It is important therefore to understand what factors may influence subjective attitudes towards inequality.
One of the most productive explanations of people's perception of inequality is provided by Hirschmann’s 'tunnel effect'. It means that people in societies with well-functioning means of social mobility tend to be more relaxed about inequality. This hypothesis has received both theoretical and some empirical support.
The perception of inequality is also associated with the legitimacy of wealth acquisition. If the public believes that wealth has been acquired legitimately as a result of 'fair play' then the associated inequality is not perceived as a problem. Conversely, if people believe that wealth has been acquired in a dishonest, unfair, socially unacceptable manner, they tend to resent it more.
According to the authors, inequality is not caused by problems with the market per se, but rather by the effects of 'institutional sclerosis' where structural barriers hinder upward social mobility'. "It is not about the economy, but about a society where people have unequal access to positions in the labour market," says Gimpelson.
The paper seeks to answer the question of whether the sense of inequality is associated with access to means of social mobility (in other words, whether someone has the chance to improve their socio-economic status), and where people are more tolerant of inequalities in societies with legitimate means of social mobility available to them.
The study's authors used three different databases: first of all, the International Social Survey Programme (ISSP-2009) which included more than 40,000 people in 40 countries. In addition to that, the authors verified their findings by using the data from ISSP-1999 and LiTS-2010.
Those who have experienced a move up the socio-economic ladder tend to be much more tolerant towards inequality in society.
However, alongside upward mobility, the means of such mobility also matters. For example, widespread use of non-meritocratic methods of wealth generation, such as bribes, corruption, and family or other connections, lower public tolerance for inequality. On the other hand, recognition of achievement through meritocratic means, such as 'hard work', does not affect the perception of inequality. It is also clear that the larger the country's middle class, the better the prospects for upward mobility.
These findings have been comprehensively tested using different empirical data, different variables, different sets of countries, and different econometric specifications. The authors conclude that in countries with higher rates of upward social mobility people are less inclined to consider inequality a serious social problem. If the dominant 'tools of success' are seen as fair and legitimate, society is prepared to accept even substantial inequality.
This means that attitudes towards inequality depend to a large extent on societal institutions, which may either offer equal opportunities or create advantages for some and barriers for others. Thus, the main challenge for politicians is to steer away from involving society in dangerous disputes on wealth redistribution, but instead to avoid and reduce any 'institutional sclerosis' hindering social mobility.