Income inequality, distributive fairness and political trust in Latin America

Highlights

• We analyse the association between income inequality and political trust.

• We test whether distributive fairness perceptions and political trust are related.

• We inspect the interaction effects between these two levels of inequality.

• Separately, both inequality dimensions are negatively related with political trust.

• But higher income inequality attenuates the effect of fairness perceptions.

Abstract

In the wake of rising levels of income inequality during the past two decades, widespread concerns emerged about the social and political consequences of the widening gap between the poor and the rich that can be observed in many established democracies. Several empirical studies substantiate the link between macro-level income inequality and political attitudes and behavior, pointing at its broad and negative implications for political equality. Accordingly, these implications are expected to be accentuated in contexts of high inequality, as is the case in Latin America. Despite these general concerns about the consequences of income inequality, few studies have accounted for the importance of individual perceptions of distributive fairness in regard to trust in political institutions. Even less is known about the extent to which distributive fairness perceptions co-vary with objective indicators of inequality. Moreover, the research in this area has traditionally focused on OECD countries, which have lower indexes of inequality than the rest of the world. This study aims at filling this gap by focusing on the relevance of distributive fairness perceptions and macro-level inequality for political trust and on how these two levels interact in Latin American countries. The analyses are based on the Latinobarometer survey 2011, which consists of 18 countries. Multilevel estimations suggest that both dimensions of inequality are negatively associated with political trust but that higher levels of macro-level inequality attenuate rather than increase the strength of the negative association between distributive fairness perceptions and political trust.

Introduction

Income inequality and its far-reaching political, economic and social implications have increasingly been gaining importance on national and international political agendas alike (McCall and Percheski, 2010, OECD, 2008, OECD, 2012). While the causes of income inequality can be manifold as they mainly revolve around increasing gaps in market and capital income, weakening redistributive effectiveness of taxation policies and in-kind benefits, changing household structures or less effective employment protection legislation and processes of globalization, there is widespread agreement on income inequality’s disturbing challenges to social cohesion and political stability (Nolan et al., 2013, Piketty, 2014, Stiglitz, 2012). Apart from its effects on social mobility, life expectancy or happiness (Delhey and Kohler, 2011, Wilkinson and Pickett, 2010), high levels of income inequality impact a broad range of values, attitudes and behavior that are related to social distrust, less solidarity, corruption, bad governance, or weakening political support (Anderson and Singer, 2008, Coburn, 2000, Cozzolino, 2011, Gustavsson and Jordahl, 2008, Hartner-Tiefenthaler et al., 2012, Horn, 2011, Karakoc, 2013, Lim and Sander, 2013, Newton and Zmerli, 2011, Oh, 2012, Park and Subramanian, 2012, Paskov and Dewilde, 2012, Pryor, 2012, Rothstein, 2011, Tyler et al., 1985, Uslaner, 2008, Uslaner, 2011). As an impediment to political equality, economic inequality may also weaken the very foundation of democratic societies (Oh, 2012).

Among the myriad of indicators presumably affected by economic inequality, political trust has recently attracted particular attention given its pivotal role in the stability and legitimacy of democratic regimes (Anderson and Singer, 2008, Newton and Zmerli, 2011, Uslaner, 2011). Generally, legitimacy for democratic systems and their leaders emanates from effective rule of law, separation of powers, and the pursuit of the common good, as well as from trustworthy, transparent, fair, accountable and responsive institutions and actors. Under these conditions, citizens are particularly willing to respect the law, adhere to norms of good citizenship, and become more interested in politics, more co-operative and more involved in civic affairs (Putnam, 1993). As a consequence and to the extent that political institutions and actors are indeed held accountable by the public for a fair distribution of resources in society, political trust may also be highly susceptible to large or increasing income gaps. Despite the alleged universality of its far-reaching implications, a broad range of recent comparative empirical research has either focused on advanced industrial societies where levels of inequality are rather modest or on transitional countries such as Central and Eastern European states that have been exposed to remarkably increasing levels of economic inequality over the past two decades (Lancee and van de Werfhorst, 2011, Lancee and van de Werfhorst, 2012, Solt, 2008, Uslaner, 2011, van de Werfhorst et al., 2012). While empirical evidence suggests consistent negative consequences of rapidly increasing levels of income inequality in countries of transition, comparative analyses of advanced industrial societies provide rather inconclusive results.

By contrast, individual perceptions and negative evaluations of income inequality, which have been shifting lately to the forefront of scientific trust research, appear to exert a strong and direct impact on political support and legitimacy irrespective of an individual’s socioeconomic background (Jost and Major, 2001, Kluegel et al., 1995, Kluegel and Smith, 1986, Kumlin, 2004, Loveless and Whitefield, 2011, Tyler, 1997, Tyler, 2006). Although it is increasingly becoming evident that individual perceptions of inequality fail to accurately reflect trends of income inequality at the country level (Aalberg, 2003, Malahy et al., 2009), tensions and conflicts within societies arise when inequalities are perceived as illegitimate, unfair or unjust (Noll and Roberts, 2003). Accordingly, the corroding influence of income inequality on democratic legitimacy unfolds itself through multiple layers.

To advance this evolving strand of research, the present study focuses on Latin America, the region with the enduringly highest inequality indicators worldwide and where the impact of inequality on political trust acquires an additional relevance given the antecedents of authoritarian and military regimes during the last century. Its objectives are thus twofold: on the one hand, to analyze the extent to which macro-level inequality is associated with political trust in Latin America, and on the other, to study whether and how socio-psychological processes related to individual perceptions of distributive fairness play a role in the association between income inequality and political trust. To this end, we pursue the following research questions: To what extent is macro-level income inequality associated with political trust in Latin American societies? Which roles do individual perceptions of distributive fairness play in analyzing trust in political institutions? Does the strength of the association between the perception of distributive fairness and political trust vary according to the countries’ levels of income inequality? Finally, to what extent does individual social status moderate the association between distributive fairness perceptions and political trust?

This study draws on the Latinobarometer survey data from 2011 encompassing 18 Latin American countries and macro-level indicators of income inequality, quality of democracy and economic well-being. Embedded in a multilevel research design, the study investigates the complex interrelationships between objectively measurable income inequality and subjective perceptions of a fair societal income distribution and political trust.

In the subsequent sections, we will first lay out the conceptual framework of political trust and its empirical antecedents with a particular focus on the relevance of objectively measurable levels of income inequality and individual distributive fairness perceptions. We then describe the institutional causes of more recent trends of income inequality in Latin America and subsequently derive and discuss our hypotheses. The following empirical section investigates the macro–micro linkage between the two dimensions of income inequality and their influence on political trust. Concomitantly, we will also test whether the associations between inequality and political trust still hold when measures of democratic and economic performance as well as individual social status are taken into account. The concluding section offers a brief summary of the main empirical insights and discusses major implications.