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Inequality, trust, and sustainability

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  • Kemp-Benedict, Eric

Abstract

Instrumental arguments linking inequality to sustainability often suppose a negative relationship between inequality and social cohesion, and empirical studies of inequality and social trust support the assumption. If true, then redistribution should increase levels of social cohesion and thereby ease the implementation of policies that require collective action to achieve shared benefits. However, an examination of the data suggests that at least part of the relationship may be explained by income level, rather than income distribution, suggesting that growth, rather than redistribution, may achieve the same goal. This paper tests for the possibility and suggests that income is indeed important in explaining differences in levels of social trust. However, the effect of income level is insufficient to explain all of the dependence on income inequality; both income level and income distribution are correlated with social trust. The analysis is done at the income decile level using individual response data from the World Values Survey. While the analysis is limited by the availability and reliability of the underlying data, the results suggest that neither redistribution nor growth alone is sufficient to raise a low-trust country to a position of medium or high trust. Rather, using the parameters estimated in this paper, a combination of growth with narrowing income distributions could, over a period of perhaps two decades, produce a significant change in levels of social trust.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33288.

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Date of creation: Sep 2011
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Handle: RePEc:pra:mprapa:33288

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Keywords: income inequality; social trust; social cohesion; composition effect; World Values Survey;

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  1. Pelletier, Nathan, 2010. "Environmental sustainability as the first principle of distributive justice: Towards an ecological communitarian normative foundation for ecological economics," Ecological Economics, Elsevier, vol. 69(10), pages 1887-1894, August.
  2. Kemp-Benedict, Eric, 2011. "Political regimes and income inequality," Economics Letters, Elsevier, vol. 113(3), pages 266-268.
  3. Scruggs, Lyle A., 1998. "Political and economic inequality and the environment," Ecological Economics, Elsevier, vol. 26(3), pages 259-275, September.
  4. Jennifer M. Mellor & Jeffrey D. Milyo, 2001. "Income inequality and health," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(1), pages 151-155.
  5. Hausman, Daniel M., 2004. "Trust and Trustworthiness, by RUSSELL HARDIN. Russell Sage Foundation, 2002, xxi + 234 pages," Economics and Philosophy, Cambridge University Press, vol. 20(01), pages 240-246, April.
  6. Boyce, James K., 1994. "Inequality as a cause of environmental degradation," Ecological Economics, Elsevier, vol. 11(3), pages 169-178, December.
  7. Baland, Jean-Marie & Platteau, Jean-Philippe, 1999. "The Ambiguous Impact of Inequality on Local Resource Management," World Development, Elsevier, vol. 27(5), pages 773-788, May.
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