Inequality, Support for Social Policies and Political Trust: Evidence for a Negative Spiral

This paper aims to build up on a research strand that tries to reason why wealth and income inequalities endure, even when countries become democratic, or have installed redistributive policies (Goodin and Dryzek, 1980; Meltzer and Richard, 1984; Scheve and Stasavage, 2017). It analyses whether political distrust breeds scepticism towards (a) social spending in general and (b) an increase of welfare state expenditure. Previous research (e.g., Hetherington, 2005; Yamamura, 2013), already points in this direction, but there are hardly any articles that investigate this link in in a cross-national and longitudinal perspective. Conditions of high inequality usually lead citizens to demand for higher levels of redistribution (Finseraas, 2009; Jaeger, 2013; Meltzer & Richard, 1984). More unequal societies have more citizens who feel exposed to social and economic risks (Jaeger, 2013). The theoretical argument goes that these citizens will seek redistribution and welfare state policies to secure their well-being (Finseraas, 2009; Jaeger, 2013). As Meltzer and Richard (1984) for instance argued, the more unequal a society, the higher the difference between the median income and the mean income. The median voter will seek to minimise the difference between the median and mean income, and hence, favour redistribution. However, without trust in one’s fellow citizens and especially in one’s political institutions, it seems likely that public support for income redistribution and welfare state spending will be limited. If citizens do not think that their political institutions will provide policies that take their perspective into account or act in an impartial manner, it seems logical they will not be willing to pay more taxes, or leave the responsibility of economic welfare within the hands of their political institutions. It could even be speculated that citizens blame their political actors for the extent of inequality that exists within their country. This line of thinking would also explain why some empirical studies found a negative effect of inequality on the public demand for redistribution (Iversen, 2005; Iversen and Soskice, 2006), i.e., that it are precisely the most equal countries where the demand for redistribution and social spending is the highest. We find evidence that political distrust indeed goes on pair with lower support for social spending or an increase of governmental welfare state activities. In addition, we show that the negative relation between political distrust and support for social policies is stronger than the positive relation between higher levels of economic inequality and support for social policies. Hence, a negative spiral between economic inequality, political distrust and support for social policies and welfare state expansion occurs, and economic inequality endures. This project goes beyond similar studies by analysing an original two-wave panel survey on political attitudes and social capital in Germany and Norway, which allows us to make stronger causal claims. Insights on the basis of the European Social Survey’s 2016 welfare module provide additional evidence for the hypotheses. Analysis methods include multilevel structural equations modelling and panel data analysis.