Why poor people support tax cuts for rich people

via Boing Boing

This article is really going to rip Labour’s undies since their only answer seems to be to tax the rich. Based on this research I can now see why Labour isn’t getting any cut through with the electorate.

Never mind the top, avoid the bottom

Instead of opposing redistribution because people expect to make it to the top of the economic ladder, the authors of the new paper argue that people don’t like to be at the bottom. One paradoxical consequence of this “last-place aversion” is that some poor people may be vociferously opposed to the kinds of policies that would actually raise their own income a bit but that might also push those who are poorer than them into comparable or higher positions. The authors ran a series of experiments where students were randomly allotted sums of money, separated by $1, and informed about the “income distribution” that resulted. They were then given another $2, which they could give either to the person directly above or below them in the distribution.

In keeping with the notion of “last-place aversion”, the people who were a spot away from the bottom were the most likely to give the money to the person above them: rewarding the “rich” but ensuring that someone remained poorer than themselves. Those not at risk of becoming the poorest did not seem to mind falling a notch in the distribution of income nearly as much. This idea is backed up by survey data from America collected by Pew, a polling company: those who earned just a bit more than the minimum wage were the most resistant to increasing it.

Poverty may be miserable. But being able to feel a bit better-off than someone else makes it a bit more bearable.

 


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  • nasska

    I guess the reaction would be because at least in NZ & the USA, poverty is relative rather than absolute.

  • nasska

    I guess the reaction would be because at least in NZ & the USA, poverty is relative rather than absolute. People can afford to concern themselves with their status if they’re not starving.

  • BPH

    I have many friends who live in India from all walks of life and they often quote to me..
    In western countries people look up to others higher than themselves on the economic tree and comment that they would like what they have wheras in India they look backwards and say thank goodness Im not down there …and work to ensure they dont go there.

  • TM

    Very true. You also find the people who hate people on the dole the most are people working minimum wage jobs.

  • axeman

    The best way to help the poor is to not be one of them.
    ~ Wallace Wattles

  • nadis

    Art Laffer gets it right here. The video is worth watching.

    http://www.cnbc.com/id/44191413

    Laffer is the economist behind the Laffer curve which shows the declining revenue you get from increasing taxes beyond a certain point.

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