It’s the Wealth Gap, Stupid: Inequality Drives 'Economic Anxiety' - Both Real and Perceived

One of the most prominent story types of 2016 election coverage involved dropping in on Southern and Rust Belt communities that supported Donald Trump and probing the people and their towns for answers. The economic “anxiety” of the white working class emerged as an explanation for why an ill-tempered real estate magnate had become the champion of voters who might in other years have been turned off by his conspicuous affluence, lackadaisical faith and combative demeanor, to say nothing of his “Access Hollywood” tape. Trump voters, it was said, have been left behind economically by globalization and the technological divide and have seen their economic prospects plummet in recent years.

Some of that lined up with reality. But when the data emerged, another picture emerged of a key Trump voter bloc — still overwhelmingly white, but not necessarily economically insecure. A majority of Americans who make more than $50,000 a year voted for Trump, compared to a majority of those who make less who voted for Hillary Clinton. The narrative then shifted to racism, as data also showed it drove Trump voters to the polls.

As a new book by social psychologist Keith Payne explains, the narratives aren’t mutually exclusive or necessarily contradictory. In “The Broken Ladder: How Inequality Affects the Way We Think, Live and Die,” Payne explains the research that shows that inequality can predict outcomes previously associated solely with poverty, such as higher infant mortality rates, lower life expectancies and higher rates of obesity. Areas with a larger wealth gap tend to have more of these problems than those with more homogeneous standards of living.

Even more relevant to the question of “economic anxiety” is the research that shows perceptions of inequality are just as important as actual numbers. When people feel poor—regardless of whether or not they objectively are — they exhibit risk-taking behavior and act in their short-term interests. When they feel richer, they practice delayed gratification and plan ahead.

“We have to look at ordinary middle-class people and ask why it is that, regardless of actual money, so many of them feel that they are barely getting by, that they are living paycheck to paycheck to paycheck, that the neighbors know something they don’t, and that if they could just earn a little more, then everything would be a bit better,” he writes.

These perceptions have real outcomes, according to Payne. People who locate themselves on a lower “rung” of perceived affluence are more likely to suffer from depression, anxiety and chronic pain, and it’s more probable that they will make bad decisions, underperform at work, suffer health issues like obesity and heart problems, and even believe in conspiracy theories.

Contrary to the “bubble” argument, it’s also not true across the board that poor people vote Republican and the affluent vote liberal. Higher incomes result in a higher probability of voting GOP. But feeling poor — or well-off — plays a role.

“The tendency for the rich to vote Republican is stronger in poor states than in rich ones,” Payne writes. “If you are a wealthy Mississippian, you are much more likely to vote Republican than if you have the same wealth in New York or Connecticut.” Social comparisons — a six-figure income makes you feel more well-off in Tunica than in Manhattan — affect how people think about politics and therefore how they vote.

Payne’s book encourages us to look beyond bank statements at how people think and feel as a better predictor of behavior. The incomes of the poor and middle class, when adjusted for inflation, have been fairly stagnant since 1980, while the wealth of the 1 percent continues to rise. Feeling poor — and the anxiety that goes along with that — is relative.

“Even though the subjective experience of poverty or subjective experience of wealth and subjective experiences of inequality are what drives so many of these effects, the consequences are not just subjective,” Payne told me. “The subjective perception is important, but we can’t lose track of the fact that it ends with objective outcomes.”

I spoke with Payne by phone last week, after the House of Representatives voted to repeal and replace the Affordable Care Act with the support of many constituents who simultaneously rely on Obamacare and have called for its repeal.

You’ve just written a book about inequality, and you’re from Kentucky. What did you think about J.D. Vance’s “Hillbilly Elegy?”

I thought it was a really interesting memoir. Even though I grew up in western Kentucky and he’s writing about eastern Kentucky, I recognized a lot of the experiences he talks about and the mentality of people. I thought it was excellent [as] a memoir of personal experience. I was a little surprised toward the end when the author seemed to throw up his hands and say, “But in the end there is nothing do about these problems.” I would disagree with that implication.

You mean the implication that it’s an inherent cultural issue that keeps people poor and unhealthy and unstable, that there is nothing that you can really do without changing people’s entire perceptions of who they are?

That’s right. People are exquisitely sensitive to their contexts. Both economic policy and history show that if you change the economic context in which people live, then they start to behave differently and think differently. I think the reason that people sometimes get into the self-destructive patterns of behavior that “Hillbilly Elegy” talks about is that they are responding in what is a reasonable way to their immediate circumstances. If you change those circumstances, people’s thoughts and behaviors change too.

People tend to look around and say, “Well, whatever the baseline is, whatever the default is, you know, that’s just normal.” But of course the conditions that are leading to the growing inequality that we see around us today are the result of policies, and policies are the result of choices.

Different places, whether it’s different states or different countries, make different choices. As a result, they have different levels of inequality. And you can see that reflected in people’s lives.

I think people are responding to their environments, and their environments are the products of choices.

One of the media’s big obsessions has been the struggle to understand how Donald Trump became president. One of the themes that emerged from this is the “economic anxiety of the white working class.” When that narrative is countered with actual statistics — when it turns out that a lot of Trump voters are relatively well off, especially if you compare their incomes to working-class minority Clinton voters — how come those two things don’t really align with each other?

Subjective perception is incredibly important. Think about how much it takes to feel like you are getting by OK today as opposed to 100 years ago. It takes much more. Think about how much it takes to feel like you are getting by OK in America as opposed to, say, in Bangladesh. It’s very different. And in the same way, it takes more to feel like you are getting by if you are in a context in which some people are really getting ahead. It feels like other people are all passing you by. That feeling of being left behind is something that a lot of journalistic accounts of the 2016 election have pointed out as a major motivator for people who voted for Donald Trump, and I think that’s probably right.

But the feeling of being left behind isn’t inconsistent with the idea that people actually have above-average incomes, [as] Trump voters [did] on average. If you look at how incomes have changed over the last 50 years or so, the bottom two-fifths are making — with inflation, in adjusted dollars — almost exactly the same as they were making in the late 1960s. That hasn’t changed.

What’s changed is that the top 5 percent, the top 10 percent, the top 1 percent have been making drastically more over time. Making the exact same amount today as maybe your grandparents’ family made in the ’60s feels like you are being left behind, because other people are getting so far ahead.

What is it that makes some people think, well, the enemy, so to speak, is that 1 percent, or that fraction of the 1 percent, who are getting wildly ahead while the rest of us are being held back? While other people think, well, the enemy is other people around me who I perceive are getting unfair advantages? There’s a big divide there between progressive and conservative voters, in terms of who they see as their economic opponents. 

The changes in the economy that have led to this growing inequality are actually very complex and very abstract. So there are things like globalized patterns of trade, technology, robotics and policies that have not changed tax rates, or redistribution policies, in ways that keep up with the growing wealth at the top; that’s all very abstract and complex. Ordinary people, when they’re thinking about their lives and they’re thinking about politics, don’t typically focus on abstractions as explanations.

And so there are different competing narratives out there. Some, like you said, focus on the 1 percent as the concrete cause of these problems. Other competing narratives [include] maybe it’s immigrants coming in and taking our jobs, or maybe it’s environmentalists trying to destroy jobs in coal country, those sorts of things. Those are very concrete. There is an identifiable person who’s the bad guy. And so all of those [narratives] are going to have an advantage in terms of people’s minds as being plausible explanations. There is somebody doing something that’s leading to my particular condition.

Is it the 1 percent on Wall Street that are the bad guys, or is it immigrants coming in and taking jobs? Which one seems more plausible to you is going to depend on how much those different narratives fit with the worldviews that we already have. Those are conditioned by the social networks we’re a part of, the places we live in and things like levels of education and all of those background factors that predispose some people to resonate more with the liberal version of the story and others to resonate more with the conservative version of the story. But all of those are pretty concrete oversimplifications compared to what’s driving inequality on a macroeconomic level.

Do you think it’s possible for Americans to come together to address those abstract issues of inequality, or is that just beyond the scope of a country of our size and geographical diversity, with the historic racial issues that we’ve had?

In a representative democracy, the way this works is that individual citizens don’t necessarily have to have complex mental models of economic policy, right? Policy elites who actually focus on these issues, whether it’s in government or in think tanks and places like that, they are the ones who grapple with the more complex issues. I think it’s a shame that the experts are allowing themselves to be polarized and partisanized along with the electorate. Ordinary voters vote for politicians, whose job is to be an intermediary between the expert policy [theorists] and explain it to ordinary people. Unfortunately, the voters and the politicians, as well as the experts, are only listening to their own side. I think a lot of responsibility rests on both the politicians and the experts to listen to the evidence.

One concrete manifestation of these theoretical and economic models that’s changing in front of our eyes is health care. Republican voters on one hand are saying, “I love having health insurance now; it’s saved my life” and on the other are saying, “But I’m still going to vote for the guys who are promising to do away with it.” But coverage of pre-existing conditions is a concrete thing; a person with a household budget and awareness of their own health can put their hands around that issue.

The common thing is that people don’t always connect the way that they view individual cases to the way that they view policies about how entire systems work. So for Republicans right now, there is a conflict between [their individual cases], especially for lower-income people who would benefit from Obamacare, and the messages that they’re getting otherwise from Republican leaders.

But also, the general worldview that is more popular among the right says that America is a well-functioning meritocracy in which everybody earns what they get and their rewards are just. That’s a much more frequently endorsed worldview on the right than the left. So that creates a conflict for people, especially [those] who would actually benefit from benefits like [affordable] health care.

In terms of the psychology of it, it’s not surprising that we focus on one issue at a time and then say to voters, “Well, you know, if you hope to repeal Obamacare, it’s going to hurt you. Now, do you still want to vote for Republicans?” One issue isn’t going to flip somebody’s entire worldview because we are so polarized and sorted into not only political issues, but also urban and rural, highly educated and less educated, more religious and less religious; all of these things go together in a package and no single issue is going to flip somebody from one camp to the other just because it is inconsistent with all of the rest.