Martin Schröder

Here I present new research findings in a way that is accessible for everyone. Please feel free to comment!

Does inequality make people unhappy?

In every society, some have more income than others. In some societies, some have much more income than others. But are people that live in more equal societies happier with their life? The prevailing view is that income inequality breeds unhappiness.

But does someone from Sweden really wake up in the morning to thank god that she does not live in a country with more inequality? Probably not… Indeed, empirical studies that compare whether countries with more inequality have a happier population showed mixed results. Some found that indeed, countries with more inequality have a more satisfied population. But others found the opposite: countries with more inequality actually have a MORE satisfied population. Go figure.

I think that the problem of existing studies is that they compare countries. They can show whether a country that is more equal than another country also has a happier population. But this is not how it works. We do not compare our inequality to some other country, we compare what we experience now to how what we have come used to from our own country. Using data from the World Values Survey, the British Household Panel Study, the Australian panel study of Household Income and Labour Dynamics, the Korean Labor and Income Panel, the Russian Longitudinal Monitoring study, the Swiss Household Panel and the German Socio-Economic Panel, I can indeed show that people are less satisfied when inequality in their own country is higher than it used to be. But they are not more satisfied when they live in a country with less inequality than another country. The article just appeared in the Journal of Happiness Studies:


Inequality and trade unions as prey and predator

Imagine a population of wolves and sheep. Wolves eat sheep. The wolve population grows, as long as there are sheep. But once the wolves have eaten all the sheep, the wolves starve and die. When the wolves are gone, the sheep population can recover. This is a basic prey and predator model. Essentially, it shows how trade union power is linked to inequality, trade unions are the wolves and inequality is the sheep.

Using data from 12 countries over 100 years, I can show with my co-author Louis Chauvel that trade unions recruit more members after inequality has been high. Strong trade unions then fight inequality. But in doing so, they destroy what helped them to recruit members in the first place. Once they have managed to lower inequality, no one has an incentive to join a trade union anymore. Trade unions then lose members, so that inequality can eventually increase again. If this happens, eventually people have an interest to join trade unions again, and they do. So again you have trade unions fighting inequality, but by doing so sowing the seeds of their own demise. We thus found the following dynamic:

Inequality and trade unions

We found this dynamica characterizes the development of inequality and trade union membership in Australia (from 1950- 2010), Canada (1941-2010), Denmark (1870-2010), France (1905-2009), Germany (1891-1998), Italy (1974-2009), Japan (1947-2010), the Netherlands (1914-1999), Norway (1900-2008), Sweden (1903-2010), the UK (1918-2009) and the US (1917-2011). By showing this empirically, we reconceptualise the relationship between inequality and union density as a prey and predator model, where predators eat prey – unions destroy inequality, but thereby also destroy their own basis for survival. By empirically showing that trade union density and social inequality influence each other in this way over long periods, this article contributes shows how social problems get met by social reactions, but these reactions overshoot and they often come to late.

For the entire article, check out this address:

How we get used to income inequality

In a recent paper I wrote, I can show that when more income inequality exists in a country, people also start to accept more income inequality. This means that when inequality increases in a country, after 3 to 4 years, people have adapted their social justice views to this and have accepted the increased inequality. This shows why people are not more outraged by rising inequality, they simply seem to have a strong tendency to get used to it. For the article, please access this link:


How have views on fair social inequality changed in the US since 1950?

Hey there,

I thought I would let you in on my newest research results. I wanted to know how, with increasing social inequality, conceptions of ‘fair’ social inequality have changed? I will show you in the following, how justice norms in the media have changed from favoring a more egalitarian distribution of incomes to favoring more social inequality.

In order to understand this, I have looked at changes in income inequality and I have read 600 articles that appeared in the NY Times since 1950 and that contained the search terms ‘income* social* equal* justice poverty.’ Thus, I looked at all articles that make reference to incomes, social matters, equality justice and poverty. I have then coded the statements in these articles according to two types of statements. Statements that in one way or another argue for more social inequality I have given then code ‘individualism.’ For example, the following statements reflect the code ‘individualism’:

1)       Social inequality results from merit and should thus not be reduced.

2)       One has no right to take from individuals to redistribute to others.

3)       Redistribution has to be avoided as it destroys individual responsibility and / or freedom.

4)       Inequality is economically productive

5)       Redistributive spending is wasteful.

6)       Redistributive spending creates dependent or unemployed recipients.

Statements that have argued in one way or another against more social inequality I have given the code ‘egalitarianism.’ For example, the following statements have been given this code:

1)       Basic needs must be met for everyone.

2)       Public investments should create good jobs for everyone.

3)       Social equality is economically productive.

4)       People have human rights to social transfers and social protection.

5)       Wealthy people should pay disproportionately more than poorer ones.

6)       Everyone should own property / have wealth.

I have written down guidelines in a codebook as to when assign what code and with the help of this codebook, myself and a student were able to code articles with the same justice views in about 80 percent of the cases. So what justice view is assigned to what article is not a matter of subjective opinion – even if some of this can never be entirely ruled out.

So what are the results? The dots in the following Figure shows how many statements I found in the NY Times that argued in favor of elevated social inequality, divided by the number of all articles in the NY Times of the same year. I have used a locally weighted scatter plot smoothing regression, which uses 20 percent of the available data around each point, to estimate a curve that fits the long run trend in how often this justice view has been found per year (solid line). Finally, the dashed line shows the Gini of the relevant year and therefore shows income inequality.

As one can see, statements in favor of more social inequality were very rare before the 1970s, at a time when social inequality was actually low. They increased when social inequality was very low in the 1970s.

What about the opposite view, how often can we find ‘egalitarian’ statements that argue for a more equal distribution of incomes? The following Figure shows this, using the same methods.

As you can see, arguments for a more equal distribution of income were very prevalent at the end of the 1960s, but have declined since then. Another way to show how arguments in favor of more social inequality have overpowered arguments in favor of less social inequality is to graph how many individualistic arguments existed each year, divided by the average number of egalitarian arguments per year. The following Figure shows this curve as well.

As one can see, while individualistic arguments were consistently less than egalitarian ones (measures of less than 1 on the left y-scale), between 2000 and 2005, there are more statements arguing for more social inequality than statements arguing against it. This all happened when social inequality increased.

The point I am trying to make is simple: The increase of social inequality in the US could happen in the shadow of changing statements what is seen as socially just. While arguments in the 1960s mainly argued for more social equality, statements later on argue for more inequality.

Germany does not have the 1 percent

Hey, I just did some research with Piketty and Saez numbers and Germany did not have the rise in income of the 1 percent. Image


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