The bottom of the income distribution reports 10% more items as essential than the top

Income and views on minimum living standards. David W. Johnston, Nidhiya Menon. Journal of Economic Behavior & Organization, Volume 199, July 2022, Pages 18-34. https://doi.org/10.1016/j.jebo.2022.05.007

Highlights

• This paper explores the association between income and stated views on minimum living standards.

• Data from a large nationally representative survey reveal the rich deem fewer items to be essential.

• At baseline, the bottom of the income distribution reports 10% more items as essential than the top.

• Area-level inequality amplifies the negative income gradient; rich are equally uncaring for kids.

• Views are stable, formed primarily in childhood, and have strong effects on views during adulthood.

Abstract: This paper explores the association between income and stated views on minimum living standards; that is, views on items and activities that no one in today's society should have to go without. Using data from a large nationally representative survey, we find the rich deem fewer items to be essential. In our baseline model, people at the bottom of the income distribution report 10% more items as essential than do people at the top of the income distribution. The negative relationship between income and recommended minimum living standards is robust to conditioning on a large covariate set, and remains evident when we use alternative measures of economic status, such as wealth and neighborhood advantage. We find that area-level income inequality amplifies the negative income gradient, and that the rich are no more considerate towards children than they are towards adults. We also find that changes in people's views across time are relatively small, and unrelated to major economic life events. An explanation for this stability is that views are formed primarily in childhood. We find that economic status in childhood has strong effects on views during adulthood, but that intergenerational economic mobility is unimportant.

Keywords: IncomeLiving standardsInequalityChildhood shocksCulture

JEL: D31D63D64H24H31