Attitudes towards Re-distribution of Wealth in a Welfare System Edward Harrison Mohr April, 2014
Created for Copenhagen Area Survey / KĂ¸benhavn OmrĂĽde Oversigt (KOO) Rice University: Kinder Institute for Urban Research and the Danish Institute for Study Abroad
Title ............................................................................................................................................................... 0 Table of Contents .......................................................................................................................................... 1 Executive Summary....................................................................................................................................... 2 The Issue ....................................................................................................................................................... 3 The Research ................................................................................................................................................. 5 The Findings .................................................................................................................................................. 8 Conclusion ................................................................................................................................................... 14
Executive Summary This paper examines what factors influence an individualâ€™s willingness to redistribute some of their wealth to lesser off members of their country. Ideas such as if society is a meritocracy and if an individual trusts the government are analyzed with how much an individual wants their government to redistribute wealth, and what the individual thinks of those living in poverty. The paper focuses on Copenhagen, Denmark but has worldwide implications. The findings most importantly show that there is indeed room for policymakers to increase social services for the poor in Denmark. Secondly the data shows that people need to believe both that the economic system and governmental power is inherently unfair for them to want to redistribute wealth. Conversely, if people believe that their economic system and government are both inherently well-functioning and do not need changing, they will likely feel no need to give money to those in poverty.
Tracking public opinion on key issues is extremely important in changing future policies. Understanding what influences the way that millions of people collectively think on important issues is a daunting task. If policy makers understand these factors they may be able shift current institutions and power structures in order to make people think differently on key issues, allowing new policies to pass. Leaders can change our minds without enacting new unfavorable policy given the correct data and research. Public opinion has the power to shape ideas into government policies and laws (Castillo 2008). The most important fear of a democratic leader is not of a policy or institutional failure, but that they will lose their job. Candidates would like to shape their policies towards where public opinion is likely to shift so that their ideas are likely to pass and they keep their employment. If public opinion shifts away from a leader, the leader will likely lose all grass root fundraising and support. Yet many leaders and intellectuals may feel that laws may need to be passed despite the current public opinion on the proposed policies. Working with the assumption that social laws need citizen wide support to pass, leaders would need a way to shift public opinion to their own means. Changing how the public feels on certain groups of people, current events, or ideas may change not only future policies, but the future of the country itself. A society may be judged based upon how it treats its weakest and most underprivileged citizens. A country that has extremely high inequality with a high amount of poverty and homelessness can be seen as a plutocracy. Without proper social services and a large safety net many citizens are effectively disenfranchised by not having the health and knowledge to effectively make the decisions on how to govern their own country (Jacoby 1994). Furthermore with few policies which help the poor, people are stuck in a vicious cycle of poverty which drains both the individuals and societies resources. All of society suffers when a portion of its members are in deep economic and spiritual poverty. Class pressures cause isolation of the entire country while anxiety and depression skyrocket even among the well off. Social problems for all citizens increase. Social trust and cohesion drops destroying happiness and health problems. It is in the best interests of every person within a country to help out their fellow humans in need (Wilkinson 2010).
Policy makers must work to show their voters the importance of reducing inequality in their country, and demonstrate that they have the power and competence to do so. As opinion shifts towards helping the poor, policies will follow which share society’s resources more equally and destroy the crushing poverty that engulfs many of the world’s citizens. Almost all people care about the amount of poverty in their society. Yet questions about a government’s ability and willingness to redistribute wealth to help those in need may strike a divide between a country’s citizens (Jacoby 1994). Many variables may influence how a person feels about poverty, and if they think the government can solve it. It is therefore extremely important to track public opinion on the best way to solve poverty, and see what factors may be able to change it. Understanding the factors associated with a person’s perception of equality may allow us to understand why Denmark distributes a large share of its wealth to the poor. In particular, I want to study the connection of people’s opinions about society as a meritocracy and opinions on the government to feelings on economic redistribution. The goal of the research is to give policy makers the information that allows them to increase government spending and new programs that helps those in poverty and reduces inequality. The results will do this in two ways. First, from the data politicians will be able to see what people’s current perception on poverty and homelessness is. Political leaders could then see if there is room to increase current programs based upon the will of the people. Secondly, policy makers may be able to change future public opinion when they understand what variables are related to a person’s view on poverty.
Forcing individuals to give up part of their income is no easy task. The government has to work hard to show people how grave poverty is and how effectively they can end it. Little is known about the connection between public opinion and government spending (Jakoby 1994). Government spending has the power to cause a society to become cohesive or fall apart, to distribute wealth or allow it all to accumulate with a few. Those in poverty’s suffering are hurting not only themselves but all of Denmark, and we have the power to fix it. Therefore we must learn everything we can about how public opinions may be related to government spending on the social programs.
Several theories attempt to explain a societies’ willingness to re-distribute its wealth. One theory states that it may entirely depend upon an individual’s value system (Gruner 2002). According to this theory, individual’s willingness to distribute wealth is immoveable, and they would only be willing to support a program that conforms to their set of beliefs (Gruner 2002). The theory goes so far to state that people may choose a program that doesn’t maximize their personal benefit, and even may financially harm them. A person who truly believes in total equality would vote for a system which completely redistributes wealth, even if this person makes a relatively large amount of money and would be harmed by it. A person who believes society is a meritocracy would vote for a fully winner-takes-all structure even if they would be financially compensated from a system of at least partial distribution. This theory may partially explain why people seem to often vote against their own financial interests, as they are voting to further a structure which they perceive makes the most sense. This finding has weaknesses as it assumes that individual values vary widely across a country. If people have rather similar value systems, the theory would not explain how people vote at opposite ends of the spectrum. The relatively homogeneity of culture and perhaps also value systems in Copenhagen may mean that a personal value system is not as important in changing how Danish individuals feel about the redistribution of wealth compared to personal gain. Almost every paper I read described the theory that individual incentives may be the sole independent variable connected with a willingness to redistribute income (Andersen 2012). This theory states that everyone above the mean income of a country would be against redistributing income as it would mean a loss of personal wealth, while everyone below it would see much to gain. This is largely disproven for multiple reasons. One is that we have to understand the power relations of a given country. In any state, the richer half is likely to have an immense amount of power over government rhetoric and policy compared to their poorer counterparts. (Kelly 2010) It is always extremely detrimental for the top 1% of a society to want to redistribute its wealth, and they are likely to have an immense amount of power. Therefore if this theory was true, no society would ever redistribute because the rich would be both against redistribution and have the immense power required to stop it (Jacoby 1994). The poor would always want to redistribute, but always be shut down by their better organized half. While this doesn’t occur in any industrialized nations, the importance of personal incentive in redistribution should not be
understated, and I will have to take it into account the participant’s income when conducting my study. Income may also impact individual value systems and ultimately attitudes toward wealth redistribution (Gruner 2002). People at the top of the economic ladder may undercount the role of society and feel that they have gained their wealth from their own personal work and express a need for those at the bottom to do the same. Similarly those at the bottom may understand the unfair powers of capitalism and expect the government to redistribute wealth along more equal lines. Therefore we can see personal value systems not as fixed entities, but as malleable objects which may change from other variables in a person’s life. This, combined with the rather extensive space that a valuable system may reside in, makes personal values extremely hard to track and quantify. Other studies explore similar variables but fail to show their direct connection with wealth distribution. One such study states that government distrust, a variable I am highly interested in, may be very strongly connected with a feeling of uncaringness for others within a society and a loss of cohesiveness (Andersen 2012). This is likely due to the power of a government to bring a people together through nationalism or divide a society through selective programs. A government that is seen is corrupt not only hurts itself but may damage people’s view of everyone in society. While this is likely highly related to how much an individual is willing to redistribute his wealth to others, the research does not question if government trust is related to how much a society is willing to redistribute its wealth. My findings on the importance of trust in the government and its connection to opinions on government redistribution may be strongly influenced by recent events which have led to a temporary dip in government trust. The selling of part of the energy giant DONG by the Danish government, which led to the fracturing of the current coalition, may mean that government trust has decreased (Børsen 2014). It is unclear if this dip is temporary or if it will change how people feel about if they can trust the government to redistribute their wealth. As the event is still being discussed in many newspapers months after the sale, it is likely this may influence the data. I will then have to analyze my findings appropriately to account for the date at which the survey is given. Another interesting study shows how historical cycles of inequality may be important in changing the power that some of my variables have on government redistribution. One study states how as a society becomes more and more unequal, the idea that society is a meritocracy may increase for all income groups as a way to validate the divergent incomes (Kelly 2010). This surprising finding may mean that the history of the Danish welfare state and its relative equality may influence how people perceive the merit of hard work in their society. Therefore, it is extremely important to understand the history of the Danish welfare system to understand personal views. Because the Danish welfare system is only a few decades old, I expect to see different views on work depending on the participant’s age if the theory is correct. This theory also strongly contradicts the personal value system, as it states how society should have values which are all highly influenced by a shared history.
Studies by Castillo highlight many of my independent variables and show the importance of social class. His findings state how there is indeed a strong connection between believing society is a meritocracy and not wanting to redistribute wealth (Castillo 2008). However the author also believes that his findings were extremely influenced by taking his data from an extremely class based society, that of Spain. He states that ‘Self Perceived’ ideas of class may influence ideas of meritocracy more so than actual class structures (Castillo 2008). Therefore his findings are important, yet may not translate to the much less class based Danish societal model. I also must therefore account for ideas of class in my survey and understand how that may strongly influence public opinion. His findings are also interesting as they are based on selfperceived ideas on class, rather than actual personal wealth. My literature review also made me understand the importance of other variables which should be studied to put the findings from the survey in perspective. The power of the media to influence individuals need for government wealth distribution may be more important than previously imagined (Jakoby 1994). For instance, powerful right wing media institutions in the United States have framed the government spending argument to connect the buzzword of ‘government spending’, to only helping minorities and the disabled. This means that those who might otherwise have an incentive to have a society redistribute its wealth are against it due to helping out only the perceived other. Similar attitudes against not wanting to help out the ethnically or culturally different ‘other’ exist in Denmark. To study if the variables ‘opinion on government’, and ‘if people believe society is a meritocracy’ are connected to ideas on wealth distribution, we will need to run statistical models on the Copenhagen survey to understand how the variables are related. First we will look at how respondents answer to the question Generally speaking, would you say that your local government can be trusted and If you work hard in this city, eventually you will succeed. Based on these independent variables, we will track how this may allow us to predict our respondent’s answers to the questions concerning our dependent variables. We will look at how those answers relate to Government has a responsibility to help reduce the inequalities between rich and poor in Denmark and As a nation, do you think we’re now spending too little, too much, or about the right amount of money on improving the conditions of the poor? I will also look at similar questions which ask about government action to see if trends exist. I will also have to control for multiple variables, such as gender, income and socioeconomic status. The survey has been designed after the extensive success of the Houston area survey. The survey mirrors it almost completely, with a few changes due to cultural differences in the populations. It has been translated into Danish by the statistical firm Epinion. Data for this study are drawn from the 2014 Copenhagen Area Survey. This survey, also conducted by Epinion, is a representative survey of 1093 residents living in Copenhagen and surrounding suburbs. The survey was conducted on-line, in Danish, and took on average of 17 minutes to complete. The response rate was 77%. The survey is meant to assess residents’ quality of life and their opinions on major issues of the day. Extensive analyses will be conducted by Epinion for the survey, and weights will be applied so that it closely mirrors the adult population of the Copenhagen area.
The results of the survey showed what unique views the population of Copenhagen has compared to other cities. Therefore, before the data is analyzed it is extremely important to understand the distribution of my independent variables in Denmark. The results already show interesting picture redistribution in Copenhagen. By far the most surprising result was Copenhagenerâ€™s view on if their society is a meritocracy. This divisive question is extremely important due to its implications for those in poverty.
As shown in the figure, slightly over 77% (0.771) of the people in Copenhagen believe to some degree that the way in which wealth is being distributed is unfair. This is surprising as it means that an extremely large percentage of Copenhageners do not believe that the current economic system is not giving enough money to certain individuals who are forced into poverty. This finding shows that there could possibly be large support in Copenhagen for policies that further equalize the distribution of wealth. My second independent variable dealing with trust in the government was equally surprising:
The results show that slightly over 73% (0.731) of people believe that their government is trustworthy. This means that a high percentage of people will likely rely on their government to do something about wealth distribution. Before we look at how these independent variables may relate to their dependent counterparts, we must make sure an obvious connection exists: that those who care about the poor are more likely to be in support of helping them.
As the above table shows, it is clear that Copenhagenerâ€™s who think that poverty is not due to personal fault are much more likely to want to help them. The question therefore is what variables relate to what makes people understand the systematic nature of poverty and therefore make them willing to spend their money on stopping it. It is then important to start analyzing the data together and seeing what views people seem to hold together. It is first extremely important to look at the relation between wealth and ideas on wealth distribution. If the personal incentive theory is correct: every person above the income median would feel apathetic to a widening income gap while every person below it would be hurt by it and see it as a serious problem.
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This shows with a confidence level of .000 how personal interest is tied in strongly with personal income. By glancing through â€˜It would be a serious problem if the gap between the rich and poor widenedâ€™, one sees how the observed count decreases compared to the expected as household income increases. The rich often side with their financial incentive to keep their wealth, but a significant portion would see a growing income gap as a serious problem. It is clear that personal value systems are important and that voting only for personal gain can be discounted. While a personâ€™s view of poverty as systematic has an important yet obvious connection with their feelings on wealth distribution, the importance of opinion on the government is much less clear.
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Here the data shows a surprising trend. When the variable dealing with government trust is overlaid with how much people care about income inequality, it shows a connection between not trusting the government and wanting to reduce unfair income distribution.
Those who trust the government and believe it is working well are more likely to believe that the government should reduce income distribution. Combined with the data from the other cross-tabulation, this has far reaching implications. When people see their government as being unjust and unfair, they also are likely to think wealth should be distributed more equally. In the next section, I dissect the relationship that these variables possibly have.
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From analyzing the data, it is clear that no single theory from my research can completely explain what makes individuals want to redistribute their society’s wealth. It is first of all clear that some theories are largely wrong. People in Copenhagen do not vote only to enhance their own wellbeing. The rich and poor alike are extremely interested in helping those in poverty, although the rich are less likely to want to do so. Although, by definition, 50% of people in Copenhagen are below the median income, almost 80% believes the government has a responsibility to reduce the divide between rich and poor. A slight majority even believes that the government should be spending more. As this raw data shows, there may be immediate space for lawmakers to increase funds to those in need. With a slight majority supporting them, politicians may be able to unite under a need to increase social services to the poor. Having this majority may mean that increased support could happen without even having to alter public opinion. The data shows important issues, found also in my research, that seem to strongly relate to a person’s willingness to redistribute societies’ wealth and help those in poverty. The first is that if people believe that the economic system is unfair, they are much more willing to redistribute their wealth. This finding which goes along with my research shows how completely separated capitalism is from social welfare. Capitalism makes people believe that their wealth that is in their hands is due to their own work, and therefore they feel no need to distribute it. While this itself is not surprising what is surprising is how Copenhageners perceive their system to be unfair. The majority of people in Copenhagen (57%) believe that job opportunities in the city are relatively good and therefore most people can obtain employment. However, 77% believe that it is not the poor’s fault for their poverty. This means that a substantial percent of people in Copenhagen believe that while the economic system works for them, it is not working for the poor. This finding shows that government leaders must be extremely critical of the capitalistic system in which we live in. Leaders could argue that the economic system is inherently unfair. Doing so would mean more support for redistribution. The most important finding from the survey deals with how Danes think about their government. From my research, I was expecting Danes to strongly believe that their government can do no wrong, fully represents their interests, and is always helpful. The data however proves otherwise. 44% of Danes believe that government regulation of business is inherently bad. This view shows an extremely distrustful idea that business knows better than their elected representatives. Similarly, 45% of Danes believe that their government represents the will of business instead of the will of the people. It is evident that almost half of Danes believe their government is not an ally but may hinder their country. 14 | P a g e
Therefore I was extremely surprised when the majority of Danes still supported their government increasing expenditure on welfare. One explanation for this may be the history of the Danish welfare system which has perpetuated itself into the value system of many people living in Copenhagen. Yet this contradicts the theory that high levels of government trust are related to high levels of wealth distribution. I present a new theory: the idea that the government of a country may act unfairly and with bias towards corporate interests may be related with a societies’ willingness to redistribute its funds. It seems from the data that when people believe that their economic and political spheres are both unfair, they also see that those who are being hurt by this system are in need of help. This multi-leveled unfairness makes sense in the minds of many Danes who are infuriated with the poverty they experience in their country. If the political system is fair but they economic system is unfair, then perhaps Danes believe that those in need could use their political power to fight for more distribution. If the political system is unfair but the economic system is fair, then Danes would likely think that those in need should work within the capitalistic system to enhance their economic system. It seems that when both are perceived as unfair, there may be room for the welfare State to grow. In Denmark this unique combination of personal views on government and the economy may be connected with the extremely large welfare state here. These views likely influence the value systems of Danes which trumps personal incentive for many of Copenhagen’s residents. The strong multi leveled fears of unfairness is connected with rich Danes willingly wanting to give their wealth to those in need. This may mean that community organizers, social movement leaders, and activists may be able to increase the welfare state by shifting public support. The groups should work to expose biases within the governmental system that denies needy citizens the support they need to enhance their quality of living. These groups need to further shift public opinion to expose the biases of the government so that political leaders can prove the need for a more extensive welfare system. When the poor are seen as having the extremely small voice in the political system that they currently have, they may be able to get financial support which helps them compete with the better off. Public leaders themselves may also want to work think more strongly about the public’s opinion against them. The large percent of Copenhagener’s who seem to have a distrust of their government means that the elected officials are not working with their constituents towards creating a more transparent system. Combining my research with my findings, it may be helpful for public figures to talk about the biases of both the economic system that we live in and the government system that got them elected. Doing so would help motivate citizens to vote on Election Day for officials who are against corporate interests and work towards redistributing societies’ wealth. 15 | P a g e
Working with the data in Copenhagen also showed a need for more research. The welfare system in Denmark is extremely complicated with a long history. To fully understand the data, I would need to do extensive research specifically on this system. It would be first extremely important to understand the public opinion of Danish Citizens in the mid 20th century that brought forth the beginning of the welfare state. It would be then be extremely important to look at who benefits from the welfare system and to what degree, weather the system focuses on selective or universal policies, and how both interest groups and welfare policy has changed over time. The uniqueness of the data gives proof to the theory of how a history of equality gives more power to a welfare system. The data is also extremely incomplete due to the Danish tendency to not answer a question if they seem unsure of the answer, even if they have a strong opinion. Because many of the questions I focused on were extremely thought provoking and divisive, almost every query had over 100 participants who did not know or refused to respond. This may have skewed my data in different directions depending on the question, and is important to note. If I were to redo the experiment, I would ask participants to answer every question based on their own experiences if faced with a tough question on their government. Although they may not think they know the answer, understanding what their past experiences has brought them too would be extremely important in creating a more complete data set. I also would very much like to compare the data to other Scandinavian countries. Sweden and Norway have similar welfare policies, but may be very different in other aspects. For instance, Sweden has a much more racially diverse population, so if I were to study Copenhagen vs. Malmo, I would like to focus on the effect racial diversity instead. Studying Copenhagen vs. Oslo would also be extremely interesting due to the different history Norway has with welfare and the different opinions the populations likely have.
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8. Corneo, Giacomo, and Hans Peter Gr端ner. "Individual preferences for political redistribution." Journal of Public Economics 83.1 (2002): 83-107. Print. 9. Wilkinson, Richard G., and Kate Pickett.The spirit level: why greater equality makes societies stronger. New York: Bloomsbury Press, 2010. Print.
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