“Social networks affect redistribution decisions and polarization”
“Whom you observe in your daily life alters your willingness to tax the rich”
Recent research suggests that the visibility of extreme wealth within a person’s social circle drives their support for economic redistribution but simultaneously fosters political polarization and personal dissatisfaction. A study published in PNAS Nexus combines computational modeling with online experiments to demonstrate how network structure creates specific biases in how individuals perceive inequality.
Economic inequality has expanded significantly across many industrial democracies in recent decades. This trend presents a difficult puzzle for political scientists and economists. Standard political theory posits that in a democracy where wealth is concentrated at the top, the majority of voters—who have below-average wealth—should vote for policies that redistribute resources more evenly.
This concept is known as the median voter theory. It predicts that as the gap between the rich and the middle class widens, the demand for redistribution should rise. However, this theoretical correction often fails to occur in the real world.
The results from the experiment revealed that network structure serves as a powerful lever for collective economic decisions. In the segregated networks, the groups consistently voted for the lowest tax rates.
This occurred because the poor participants, seeing only other poor people, underestimated the potential benefits of redistribution. They did not realize how much wealth was available to be taxed. Simultaneously, the rich participants, seeing only other rich people, felt no pressure to share. This created a consensus for low taxes.
A different dynamic emerged in networks where the wealthy were highly visible. When poor participants were placed in a network where they frequently observed rich neighbors, they voted for significantly higher tax rates.
The study also uncovered a paradox regarding individual happiness. The researchers found that poor participants in the segregated networks were the most satisfied with their outcomes. Even though they remained the poorest in absolute terms because they voted for low redistribution, they felt content. They were essentially shielded from the knowledge of their relative disadvantage.
On the other hand, poor participants in the “rich visible” networks reported the lowest levels of satisfaction. This dissatisfaction persisted even though they ended up with more money due to the higher tax rates they voted for.
The act of constantly comparing themselves to the visible wealthy induced a sense of relative deprivation. They were objectively better off financially, yet they felt worse about their situation and viewed the game as unfair.
The study suggests that breaking down information silos can indeed increase political support for redistribution. When the poor see the rich, they want to tax them.
However, the authors highlight that this is not a cost-free solution. Strategies that increase the visibility of excessive wealth may successfully shift policy, but they risk exacerbating political polarization and reducing the subjective well-being of the less advantaged.
Necessarily, our study relied on a very simplified version of a political economy, with a flat taxation rate, referendum voting, and equally shared benefits.
This departs from the reality of many modern societies, which have progressive taxation, complex political representation systems, and complex benefit generation and distribution arrangements with investment and innovation growth, administrative inefficiencies, discrimination, biases, and fraud.
Our results show that even under simplified and ideal conditions, redistribution and agreement about it are susceptible to social information and interaction networks.
In particular, biased information from social networks and media could affect social perception and stifle political action.
In the real world, people actively choose their social circles, potentially reinforcing the segregation that the researchers found leads to apathy. The study implies that while ignorance may be bliss for the disadvantaged, it also cements their economic status.
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