The British are not an envious lot – at least not compared to most of our neighbours. By way of evidence, I’m grateful to Kristian Niemietz of the IEA for tweeting about a fascinating paper by Judith Niehuas of the Cologne Institute for Economic Research.
Entitled ‘Subjective Perceptions of Inequality and Redistributive Preferences: An International Comparison’ it provides an answer to a puzzling question: why do countries with similar levels of inequality have sharply differing attitudes towards it?
“Germany, France and Switzerland share more or less exactly the same degree of measured income inequality, they differ considerably as to how critically income differences are viewed. According to the ISSP 2009, more than half of the Germans strongly agree that differences in income are too large. The French view their income distribution even more critical: 69 percent of the French population regards income differences as far too large. Differently, in Switzerland, people are substantially less skeptical about income differences.”
A plausible explanation is that though French society is no more unequal (as measured by the Gini coefficient) than those of its neighbours, what really counts is how unequal each country believes itself to be.
Niehaus finds that the relationship between actual and perceived inequality is a remarkably weak one:
“If the evaluation of income differences in the observed 23 European countries is contrasted with the actual Gini coefficients of income inequality, we can hardly observe any relationship… The actual inequality of disposable incomes can only explain 7 percent of the cross-country differences in critical views on income differences. The correlation coefficient of these two indicators is only 0.26 and statistically insignificant.”
However, when the subjective measure of inequality (i.e. how unequal each country believes itself to be) was compared against the proportion of people saying that income differences were too large, there was a pretty strong correlation:
“The degree of perceived inequality can explain almost 65 percent of the variation in the critical views on income differences. Correspondingly, the correlation coefficient is 0.81 and statistically highly significant.”
There are some interesting outliers. The UK, for instance, resembles the US in having a comparatively high level of inequality, but a comparatively low proportion of people saying that income inequality is too high. Even when one looks at the subjective measure of inequality, both Britain and America are among a small group of countries that seem especially relaxed about income differences. In this respect, France sits at the opposite end of the spectrum – being especially intolerant of income differences. This may help explain why so many French entrepreneurs are fleeing to London.
As much as it might like to, the British Labour Party knows that it can’t sell as leftwing a platform as that on which the French Socialists were elected. However, British resistance to the politics of envy isn’t translating into a majority-winning Conservative vote – and for that reason Ed Miliband is still on course to become our next Prime Minister.
My own view is that in order to win the Conservatives must appeal to a different kind of politics – the politics of fairness.
By and large, the British people don’t resent the success of others, but only as long as everyone has a fair crack of the whip. In the wake of so much blatant unfairness – from the various Westminster scandals to the bank bail-outs – the opportunity-destroying facts of wage stagnation and falling home ownership have become intolerable.