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Psychological factors may explain resistance to more redistribution

Recent social science research explains why rich countries are resistant to redistribution to equalise incomes. Many of these factors apply to Singapore too.

Widening income inequality is recognised in many countries today as a serious global and national problem. It threatens to undermine economic growth, political and social stability, physical health and psychological well-being, and is blamed for unleashing disruptive populist and anti-globalisation forces.

At the same time, economic research shows that public policies to reduce inequality through redistributive measures - such as greater social subsidies funded by tax increases, including unrestricted cash transfers to the poor and capital gains taxes on the rich - do not have negative impact on work effort, savings and investment, as I explained in an earlier article, "How inequality and low wages can stall growth" (ST, July 21, 2018).

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A version of this article appeared in the print edition of The Straits Times on November 06, 2018, with the headline 'Psychological factors may explain resistance to more redistribution'. Print Edition | Subscribe