A Model of Social Identity With An Application To Political Economy

American Political Science Review Vol. 103, No.
2 May 2009
doi:10.1017/S0003055409090194
A Model of Social Identity with an Application to Political
Economy: Nation, Class, and Redistribution
MOSES SHAYO The Hebrew University of Jerusalem
T
his article develops a model for analyzing social identity and applies it to the political economy
of income redistribution, focusing on class and national identities. The model attempts to distill
major ndings in social psychology into a parsimonious statement of what it means to identify
with a group and what factors determine the groups with whom people identify. It then proposes an
equilibrium concept where both identities and behavior are endogenously determined. Applying this
model to redistribution helps explain three empirical patterns in modern democracies. First, national
identication is more common among the poor than among the rich. Second, national identication tends
to reduce support for redistribution. Third, across democracies there is a strong negative relationship
between the prevalence of national identication and the level of redistribution. The model further points
to national eminence, national threats, and diversity within the lower class as factors that can reduce
redistribution.
W
hy do blue-collar American workers support
less redistribution than their German coun-
terparts? Why are they so proud to be Amer-
icans? How can we explain the fact (to be established
later) that, in most economically advanced democra-
cies, national pride is associated with reduced sup-
port for redistribution and that democracies with less
national pride actually redistribute more? This arti-
cle suggests that well-documented processes of social
identication can, when applied to a standard political
economy model of redistribution, help explain these
and related phenomena.
For the past three decades, social identity has been
the focus of intense research throughout the social sci-
ences. In particular, social psychologists and experi-
mental economists have produced a rich set of robust
empirical results based on both experimental and eld
studies. This article takes these results seriously. It rst
attempts to distill them into a parsimonious statement
of what it means to identify with a group, and what
factors are important for determining the groups with
whom people are likely to identify. The article then
proposes a concept of equilibrium where the proles
of actions and social identities are jointly determined.
The basic theoretical framework is straightforward.
A society may have many social groupsAmerican,
Hispanic, middle class, and so onbut in any given
situationindividuals identify withonly some of these.
Given their social identities, they choose courses of
action that determine the aggregate outcome. That out-
come forms the social environment that in turn affects
the pattern of social identities. Asocial identity equilib-
Moses Shayo is Lecturer, Department of Economics, Hebrew
University of Jerusalem, Mt. Scopus, Jerusalem, 91905 Israel
([email protected]).
I am especially grateful to Roland Benabou, Anne Case and
Thomas Romer, as well as to Eddie Dekel, Avinash Dixit, William
Easterly, SheldonGaron, Ori Heffetz, MacartanHumphreys, George
Loewenstein, John Londregan, Stergios Skaperdas, the editors of the
American Political Science Review, three anonymous reviewers, and
seminar participants at Carnegie Mellon, Columbia, George Mason,
The Hebrew University, NYU, Princeton, and Tel Aviv University
for their thoughtful comments and suggestions.
rium (SIE) is a steady state where (1) each individuals
behavior is consistent with his or her social identity, (2)
social identities are consistent with the social environ-
ment, and (3) the social environment is determined by
the behavior of the individuals.
Social identication is dened in terms of prefer-
ences: to identify with different groups means to have
different preferences over outcomes. Preferences in-
volve two novel components. The rst is the status of
the various groups that exist in society. Group status
is the relative position of a group on valued dimen-
sions of comparisons (e.g., wealth, occupational status,
educational achievement). Thus, if we assume that indi-
viduals value consumption, then a group characterized
by high levels of consumption will have a higher status
than a group characterized by low levels, other things
equal. The second component is the perceived simi-
larity between an individual and the other members
of the group. This component is modeled using the
notion of distance in conceptual space from cognitive
psychology. Each agent is characterized by a vector of
attributes. The perceived distance from a given group
is then simply a weighted Euclidean distance between
the agent and the prototype of that group, with the
weights reecting the relative salience of the various
dimensions. Given these two components, an individ-
ual is said to identify with group J if (1) he or she cares
about the status of group J and (2) he or she wants to
resemble the members of group J .
Next, the article provides a description of the process
of identication with specic groups. Two factors are
at work here. First, a cognitive factor: people are more
likely to categorize themselves as members of a group
the more similar they are to the other members of
that group. Second, an affective factor: people tend to
identify more with high-status groups than with low-
status groups. Importantly, the factors underlying the
process of identicationstatus and distanceare the
same two factors that affect individual behavior under
identication. This observation helps make the analysis
of social identity tractable.
The model generalizes several existing models of so-
cial preferences. It augments the Akerlof and Kranton
147
A Model of Social Identity May 2009
(2000) approachwhich emphasizes the tendency of
group members to follow the prescribed behavior of
their groupwith a second feature of identication:
the willingness to sacrice material payoffs in order
to enhance group status. This last feature also gener-
alizes models of altruism because in many situations
enhancing a groups status is equivalent to enhancing
the welfare of other group members. Notice, however,
that, to borrow a distinction from Hegel, this altruism
is particular rather than universal: it is directed at in-
group members only. Furthermore, because the model
species the factors that determine who is likely to
identify with what group, it can help account for some
of the observed heterogeneity in altruism and confor-
mity to group norms.
In this article, this general framework is applied to
one specic issue: income redistribution in democra-
cies. Since the early studies of voting behavior, it has
often been suggested that social context and social
groups have a crucial effect on political choices (Beck
et al. 2002; Conover 1984; Lazarsfeld, Berelson, and
Gaudet 1948; Miller, Wlezien, and Hildreth 1991). This
view is supported by observed differences in voting
patterns and reported policy preferences across social
groups such as class, race and religious afliation, con-
trolling for measures of economic self-interest (e.g.,
Evans 2000; Glaeser and Ward 2006; Luttmer 2001).
This article explores the possibility that part of the
reason may be that people do not simply vote their
economic self-interest: they also vote their identity. I
focus on two prominent identities: class and nation.
The model starts from the simple point that if in-
come redistribution enhances the status of the lower
class more than it does national status, then class iden-
tication makes redistribution a more important issue
to low-income voters than does national identication.
Thus, two types of equilibria may emerge. In the rst,
the members of the lower class (who constitute a ma-
jority) identify with their class. Hence, they vote for
a relatively high level of redistribution. A high level
of redistribution can in turn help strengthen that class
identity by endowing it with a higher status. In the sec-
ond type of equilibrium, members of the lower class
tend to think of themselves more as members of the
nation as a whole than as members of a low-status part
of it. They are thus less concerned with income redis-
tribution and vote for a lower level of redistribution
than they would under class identity. Again, low levels
of redistribution can in turn help make identication
with the lower class less attractive.
Which of these equilibria is likely to emerge? This
depends rst on perceived distances, which in turn de-
pend on the extent and salience of common national
attributes compared to income- and class-specic at-
tributes. For example, an increased sense of common-
ality with fellow nationals (due to a perceived com-
mon threat, say) or a reduced sense of similarity to
other members of the lower class (due to heterogene-
ity within the lower class, say) are both likely to in-
crease national identication and reduce class identi-
cation among the relatively poor. They hence promote
a lower level of redistribution. Second, the equilibrium
attained depends on exogenous sources of national and
class status. Nations with high international stature, for
example, are more likely to engender national identi-
cation than inferior ones, other things equal. Further-
more, because pretax income distribution affects the
status of the lower class, the model points to the pos-
sibility that an increase in pretax inequality will cause
the poor to shift from a class identity to a national
identity, which could lead them to vote for less redistri-
bution. Finally, in certain situations, multiple equilibria
can exist under the same economic and institutional
fundamentals. This suggests a potentially lasting effect
of historical contingencies.
Can this model help explain observed patterns of na-
tional identication and redistribution? The nal sec-
tion of the article examines the main implications of the
model, both at the individual level and at the national
level, using data from the International Social Survey
Program (ISSP) 1995National Identity surveys, the
World Values Survey (WVS), and the Luxembourg
Income Study (LIS). Overall, the model seems to ac-
count for the major patterns. First, in almost all modern
democracies, poorer individuals are more likely to be
nationalistic, as the model suggests (because, being the
majority, the poor are more similar to the national pro-
totype and because their more immediate social group
has a lower status than the status of the high class).
Second, in most economically advanced democracies,
national identication reduces support for redistribu-
tion. This effect appears to be very large when com-
pared to the effect of economic self-interest. Third, the
model implies that regardless of whether differences
in redistributive systems arise from exogenous factors
or from multiple equilibria, we should observe a neg-
ative relationship between the prevalence of national
identication and the extent of income redistribution.
A cross-country analysis reveals a very strong nega-
tive relationship between these two variables. Indeed,
when looking at well-established democracies, the R
2
is between 60% and 72%.
The rest of this section relates the article to other
explanations of income redistribution. The next sec-
tion presents the model. The third section of the article
solves the model and discusses possible interpretations
and implications. The empirical results are presented
in the fourth section. Appendix A reviews the experi-
mental evidence underlying the theoretical framework.
Proofs are in Appendix B.
Before specifying the model, it is worthwhile relating
the article to three strands of the literature on income
redistribution. First is the literature on party competi-
tion, particularly John Roemer and his coauthors work
on policy bundling (Lee and Roemer 2006; Roemer
1998; Roemer and Van der Straeten 2005, 2006). This
literature shows how, given a distribution of voter pref-
erences over tax policy and some noneconomic issue
(e.g., race), and when parties compete by proposing
two-dimensional platforms, an equilibriumcan emerge
where voters support a party whose proposed policy
does not maximize their economic interests. Notice
that unlike the model of social identity proposed here,
148
American Political Science Review Vol. 103, No. 2
policy bundling theory is not meant to explain the dis-
tribution of policy preferences. Hence, it does not offer
an account of the individual-level patterns presented
in the empirical section of this article, nor of how pref-
erences may react to policy. However, this literature
suggests that in addition to the direct effect of national
identication on preferences for redistributionwhich
lies at the heart of the present modelthere may exist
a further policy bundling effect, which emerges from
party competition. Such an effect could amplify the
relation (at the country level) between national identi-
cation and redistributive policies.
Second, it has been argued that the poor in the
United States do not support redistribution because
they misunderstand their economic interests and are
distracted by various wedge issues (Frank 2004). The
model proposed here does not dismiss such noneco-
nomic issues, and attempts to employ insights from so-
cial psychology to better understand the circumstances
under which voters are more likely to care about such
issues. The model also suggests a mechanism through
which the relative salience of certain attributes (e.g.,
American values vs. class-related attributes) can af-
fect identication patterns and hence policy prefer-
ences.
Finally, the article relates to the large literature on
the cross-country variation in welfare systems, in par-
ticular in the United States and Western Europe. There
are two prominent classes of explanations. First, there
are explanations based on differences in countries
economic, political or social characteristics, for exam-
ple, pretax income distribution (Meltzer and Richard
1981; Romer 1975); income mobility (Benabou and Ok
2001); and political and legal institutions (Persson and
Tabellini 2003). Second, there are explanations based
on the possibility of multiple redistributive equilibria.
That is, evensocieties withthe same socioeconomic and
political fundamentals may end up with very different
redistributive regimes (Benabou 2000; Benabou and
Tirole 2006; Piketty 1995). This article contributes to
both classes of explanations. Thus, although the model
allows for the standard median-voter result regarding
the effect of pre-tax income inequality, it also suggests
the possibility of a shift in identication patterns as a
result of an increase in inequality, which can lead to
reduced demand for redistribution. Furthermore, the
model highlights the importance of several other fac-
tors (e.g., diversity within the poor class) for redistribu-
tive politics. With respect to the possibility of multiple
equilibria (and history dependence), the contribution
of the proposed model is that instead of relying on
multiple beliefs or on market imperfections, it high-
lights the effect of redistribution on the status of the
lower class and hence on the likelihood that members
of that class will identify with it and vote according to
their class membership.
THE MODEL
This article examines whether a simple model of social
identity, grounded primarily in evidence from social
psychology, can help us understand patterns of national
and class identication and their relation to redistribu-
tive policies. Formally, the model is a standard normal
form game in which each agent i chooses an action
(vote) a
i
and a group to identify with g
i
. The utility
of each agent i is going to be a function of three vari-
ables:
i
his or her material payoff; d
ig
i
his or her
perceived distance from group g
i
; and S
g
i
the status
of that group. I explain each variable in turn.
Political Economy
The material payoff comes from a standard model of
redistributionby linear taxation. There is a set of agents
N, andthe analysis focuses ona subset N N of agents
who compose a single nation. A proportion > 0.5 of
the agents in this nation have a relatively low pretax
income of y
p
, whereas 1 have income y
r
, where
y
r
> y
p
. These agents will be referred to as poor and
rich, but one should keep in mind that the poor
are the median income agents. To avoid dealing with
ties, assume that the number of poor is greater than the
number of rich by more than 1. Denote mean income
by y.
For eachagent i, let
i
be that agents material payoff.
This is just his posttax income, composed of income net
of taxes and a government transfer k:
i
(t) = (1 t)y
i
+k, (1)
where t [0, 1] is the tax rate. As in the standard
model of redistribution nanced by distortionary tax-
ation (Romer 1975), income taxation involves dead-
weight losses, whichI assumetobequadratic (following
Bolton and Roland 1997). The governments budget
constraint is then
k =
_
t
t
2
2
_
y. (2)
I keep the political process as simple as possible so
the equilibrium policy directly reects the policy pref-
erences of the majority of voters. This seems like a
reasonable approach to general interest redistribution
in well-established democracies. Thus, all agents are
assumed to vote directly and sincerely over the tax rate
(i.e., each agent votes for his or her most preferred tax
rate), and the median tax rate is adopted.
1
Formally, an
action a
i
A
i
= [0, 1] by agent i is a vote for a tax rate.
Given a prole of votes a, the chosen tax rate t
[0, 1]
is determined by
t
= f (a) = median{a
i
}
iN
. (3)
It can be easily veried that absent social identity
considerations, the chosen tax rate is t =
yy
p
y
. This
replicates the standard median voter result, whereby
the equilibrium level of redistribution is higher the
1
This mechanism yields similar outcomes to Downsian two-party
electoral competition or a pure majority rule (assuming agents do not
play weakly dominated strategies), yet it signicantly simplies the
analysis (see Shayo 2007). I am grateful to the editors for suggesting
such a simplication.
149
greater is the difference between median and mean
income (Meltzer and Richard 1981).
Social Identity
I nowdene the building blocks of the proposed model
of social identity. Each building block is briey intro-
duced in general terms, and is then applied to the
redistribution setting. The general theoretical frame-
work attempts to capture concisely empirical regular-
ities documented in three well-established strands of
research that study behavior in groups: the minimal
group paradigm, public goods experiments, and the
study of conformity. These regularities are reviewed in
Appendix A, which can be read now. Amore thorough
discussion of the model and the evidence can be found
in Shayo (2007).
Social Groups. I start from a given nonempty set of
social groups G = {J : J N is a social group}. One
can think of social groups as categories that individuals
learn to recognize when growing up and living in a soci-
ety. I do not model the cultural or sociological process
by which these categories evolved. Rather, the focus is
onthe process of identicationwithgivensocial groups.
Thus, G is not an arbitrary collection of subsets of the
populationits elements must be socially signicant
categories. Denote by G
i
the set of social groups to
which agent i belongs: G
i
= {J : J G and i J }.
The application to redistribution concentrates on
two of the most politically prominent types of social
groups in modern industrial societies: nations and so-
cial classes.
2
As mentioned, I focus on a single nation.
Although there are other nations around, for the most
part they will be kept in the background. In this nation,
there are three social groups. The rst twowhich I
termclassesare the Poor and the Rich. The third
is the Nation, which includes all the agents in the
society. The set of social groups is thus G = {P, R, N},
where P = {i N : y
i
= y
p
} and R = {i N : y
i
= y
r
}.
I use lowercase p and r to denote typical low-income
and high-income agents, respectively, and uppercase P
and R to denote the social groups.
The identication process involves both a cognitive
and an affective factor. I begin with the former.
Perceived Distance. A key factor in categorization
decisions in the cognitive psychology literature is the
perceived difference between the stimulus that is to
be categorized, and the attributes of the available cat-
egories. Following Turner et al. (1987), I propose to
adopt this approach to the process of categorizing one-
self into a group. Although there are many ways to
think about perceived difference, I adopt the notion of
distance in conceptual space (e.g., G ardenfors 2000;
Nosofsky 1986, 1992). Each agent is characterized by a
vector of attributes or qualities q
i
= (q
1
i
, q
2
i
, . . . , q
H
i
) . A
2
Note that the application abstracts from other social categories
and may thus be inadequate for studying countries where regional
or ethnic groups constitute the major social categories. I return to
this point in the empirical section.
social group is characterized by the typical attributes
of its members, denoted q
J
. For simplicity, I assume q
J
is the mean across group members (i.e., q
J
=
1
|J |
iJ
q
i
).
q
J
is called the prototype of group J.
3
If attributes are
coded as binary variables, then q
h
J
is simply the propor-
tion of agents in group J with attribute h. The perceived
distance between individual i and social group J is then
representedby a weightedEuclideandistance function:
d
iJ
=
_
H
h=1
w
h
_
q
h
i
q
h
J
_
2
_
1/2
, (4)
where 0 w
h
1 and

w
h
= 1. The ws are attention
weights (Nosofsky 1986): the more salient is attribute
h relative to other attributes, the higher is w
h
.
This specication allows the social environment to
affect perceived distances in two distinct ways. First,
distances may change as the attributes of the agents
(namely, the values of q
i
and q
J
) change. For example,
the higher the fraction of people in a group that speak
my language, the more similar I perceive myself to that
group. Second, perceived distances can change as the
attention paid to the various dimensions changes (e.g.,
as the salience of income increases relative to that of
skin color).
In the application to redistribution an agents rst
attribute is his or her income (y
i
). Assume for now
that there is no within-class heterogeneity. Thus, there
are a set of attributes shared by the members of the
nation and a set of class-specic attributes shared by
the members of one class. For simplicity, we can write
all the national (or class-specic) attributes as a single
binary variable. We thus have
q
N
i
=
_
1 if i N
0 otherwise
and q
C
i
=
_
1 if i P
0 if i R.
Denote the attention weight on income by w
y,
the at-
tention weight on the national attributes by w
N
, and on
class-specic attributes by w
C
. The distance function is
hence given by
d
2
iJ
= w
y
(y
i
y
J
)
2
+w
N
_
q
N
i
q
N
J
_
2
+w
C
_
q
C
i
q
C
J
_
2
, J {P, R, N}. (5)
It is important to stress that although in general per-
ceived distances can depend on agents actions, in this
application distances are exogenous. I do not directly
model the determination of policies (e.g., the school
system) that affect agents attributes or the relative
salience of these attributes.
4
Therefore, any possible
effects of the adopted tax policy on perceived social
distances are left outside the analysis. This may not
be a very restrictive assumption if classes are mostly
characterized by attributes relating to pretax income
3
Most of the results are unaffected if the prototype is the median
rather than the mean. Part 3(a) of Proposition 2 and Proposition 4
would, however, need to be modied.
4
Similarly, the model abstracts from conformity effects of social
identication. I return to this point later.
150
and to socially inherited qualities. A British survey
suggests that this may be a reasonable approximation.
Respondents (N = 1,955) were asked which were the
best indicators of someones social classthat is, most
likely to tell you which class they belong to. The most
common answers were their occupation (44%), the
area in which they live (43%) and their accent
(38%), followed by their income (34%) and which
school they went to (27%).
5
Group Status. Social identication involves more
than just a cognitive process of self-categorization. It
also includes an important affective factor that relates
to the value of the group. Studies in social psychol-
ogy argue that the evaluation of groups cannot often
be based on some absolute standard. Rather, it is de-
termined through social comparisons to other groups
along valued dimensions of comparisons (Tajfel and
Turner 1986). In our setting, one such dimension is
material payoff. Let
J
(t) be some measure of group
J s material payoff when the tax rate is t. Let r(J ) be
the reference group of group J . The status of group J
is then given by a simple linear function of the form
S
J
(t) =
J
0
+
J
1
_
J
(t)
r(J )
(t)
_
, J {P, R, N},
(6)
where
J
1
is a positive constant. The parameter
J
0
sum-
marizes all exogenous factors that affect the status of
group J . This captures the possibility that material pay-
offs are not the only dimensions of comparison that
determine group status.
6
For the two classes, a natural measure of material
payoffs is the material payoffs of their members (i.e.,
R
=
r
and
P
=
p
). However, national material pay-
off can be measured in many ways, depending on the
weight given to the material welfare of the poor and of
the rich. I therefore write
N
=
p
+(1 )
r
, [0, 1]. (7)
Thus, if = , then national material payoff is mea-
sured by (posttax) income per capita. If = 1, we
have a Rawlsian measure of national material payoff,
whereas if equals zero it is measured by the posttax
income of the nations richest individuals.
7
Finally, I
assume that each class forms the reference group of
the other class. The nations reference group is some
other nation (or nations).
We are now in a position to formulate a denition of
social identity and a solution concept for the model.
Denition 1. Agent i is said to identify with social
group J G if his utility over outcomes [tax rates] is
decreasing in d
iJ
and increasing in S
J
.
5
YouGov Survey, August 2006, online at www.yougov.com.
6
It is implicitly assumed that there is general agreement in society
about the relative standing of the various groups. This seems to be a
reasonable benchmark and accords with sociological evidence (see
Weiss and Fershtman 1998).
7
Although material payoffs affect national status, one suspects that
such effects are small and that factors exogenous to the model are the
dominant determinants of national status. These factors are captured
by the parameter
N
0
.
In other words, identication with a group means
caring about the status of that group while paying a
cognitive cost that increases with the distance between
the individual and the group. Loosely speaking, iden-
tication thus implies making the groups interest
part of ones own interest. Given the status function
(Equation [6]), this means caring about the material
payoffs of other ingroup members. Furthermore, the
cognitive cost of identication implies that as long as
agents identify with a given group, they want to be sim-
ilar to typical members of that group: from wearing the
groups characteristic clothes and symbols to imitating
typical group behavior and expressing typical group
attitudes.
8
For tractability, I assume that the utility function of
an agent i that identies with group J takes a simple
additive form
U
i
(t) =
i
(t) d
2
iJ
+S
J
(t), (8)
where and are positive constants. I now propose an
equilibrium concept that captures the endogenous de-
termination of identication. Formally, it is a standard
Nash equilibrium.
Denition 2. A Social Identity Equilibrium (SIE) is
a prole of actions a = (a
i
)
iN
and a prole of social
identities g = (g
i
)
iN
such that for all i N we have a
i

A
i
, g
i
G
i
and
i
( f (a
i
, a
i
)) d
2
ig
i
+S
g
i
( f (a
i
, a
i
))

i
( f (a
i
, a
i
)) d
2
ig
i
+S
g
i
( f (a
i
, a
i
))
for all a
i
A
i
and all g
i
G
i
.
Thus, SIE requires not only that actions be optimal
given what others are doing, but also that each agents
social identity be optimal given his or her social en-
vironment. It should be stressed, however, that this
is an equilibrium requirement. It is not asserted that
there exists some controlled, deliberative process in
which individuals choose their social identities opti-
mally. Rather, the denition of SIE employs the tools
of optimization to describe a steady state that takes
into account the observed process whereby (1) given
cognitive distance, individuals tend to identify with the
group that possesses the higher status; and (2) given
status, tend to identify with the group more similar to
themselves.
9
8
It is noteworthy that these two components bear some resemblance
to prominent notions of party identication. That is, identication
with a party has been associated both with supporting (voting for)
the party (Bartels 2000; Campbell et al. 1960; Miller 1991) and with
the adjustment of attitudes toward the partys position (Bartels 2002;
Campbell et al. 1960; Goren 2005; Layman and Carsey 2002). Fur-
thermore, much of the debate in this literature has revolved around
the stability of identications. This is also the question that the notion
of equilibrium proposed in this article seeks to address.
9
It is worth mentioning four possible extensions of the equilibrium
concept that are not pursued in this article. First, although SIE is
dened as a situation where each individual identies with a single
group, identication with several groups can be incorporated by al-
lowing for mixed strategies. Second, identifying with no group can
151
Discussion
Before solving the model of redistribution, a few re-
marks relating the general SIE framework to some
existing formal models are in order. First, in situations
where ones actions do not affect the status of whatever
groups one identies with, nor ones perceived distance
fromthese groups, an agent in the proposed framework
behaves just like the selsh, material payoff maximiz-
ing agent of the standard economic model. However,
the framework points to other situations where this
model might be inadequate and offers a simple way of
extending it to better understand these situations.
Second, the framework generalizes the prominent
feature of Akerlof and Krantons (2000) model of so-
cial identity. Akerlof and Kranton focus primarily on
the effects of social roles and prescriptions that
indicate the appropriate behavior for people in given
social categories. Identication in their terminology
essentially means the adoption of such rules of be-
havior. In the framework proposed here, modes of
behavior that affect perceived distances between self
and group can similarly induce agents to behave in
accordance with their groups prototypical behavior.
At the same time, the framework can generate utility
losses fromand punishment ofnonprototypical be-
haviors by other group members.
10
However, in equi-
librium, such conformist behavior (and punishment of
deviants) only emerges under conditions that sustain
identication with the group in question (i.e., its status
is sufciently high, and it is perceived as sufciently
similar to the agent). Furthermore, what constitutes
the prototypical behavior may itself be determined en-
dogenously.
Third, the framework generalizes models of altruis-
tic preferences and allows at least a partial analysis of
the circumstances under which people are more likely
to hold such preferences. Specically, because ingroup
status depends positively on the payoffs of ingroup
members, then in situations where actions affect these
payoffs we may observe altruistic behavior. However,
altruism is parochial rather than universal: it only
applies to ingroup members (Bernhard, Fischbacher,
and Fehr 2006; Fowler and Kam 2007). Indeed, when
be allowed by adding to the set of social groups G
i
, and dening
S
and d
i
as constants, whose values reect the psychic cost of not
identifying with any social group. Third, identifying with groups one
does not belong to can be allowed by having the entire set G (rather
than G
i
) be the set of possible identities for agent i. Finally, in Shayo
(2007), I develop a more general equilibrium concept, which only
requires that actions be optimal given current identities and identi-
ties be optimal given current actionsnot that agents choose actions
taking into account alternative identities they can have. This con-
cept can accommodate a tendency of individuals to underestimate
changes in their preferences (see Loewenstein and Angner 2002,
and Loewenstein, ODonoghue, and Robin 2003). However, using
this more general concept does not meaningfully affect the results of
the redistribution model studied here. Following the suggestion of
the editors I hence use the familiar Nash formulation.
10
In a similar vein, the model can capture an important aspect of
inequality aversion (Bolton and Ockenfels 2000; Fehr and Schmidt
1999). That is, if income forms a sufciently salient attribute, then
agents who identify with a certain group seek to minimize differences
in income between themselves and other ingroup members.
actions affect an outgroup that competes with the in-
group for status, we may observe behavior that harms
outgroup members. Moreover, in equilibrium, such in-
group favoritismis only expected under conditions that
sustainidenticationwiththat ingroup. This is the focus
of this article.
Finally, note that the denition of SIE does not im-
pose any coordination requirementin principle, one
may identify with a group regardless of whether other
members of that group identify with it (cf. Bawn 1999).
Indeed, by itself, the social identity of agent i has no
effect on other agents payoffsneither on their ma-
terial payoff nor on the status of the group with whom
they identify. It is only when social identity affects the
choice of actions that such effects come about.
The previous remarks highlight two straight-
forwardbut importantimplications of the general
SIE framework that are left out of this analysis of re-
distribution. First, the social identity framework can
generate deviations from self-interest due to confor-
mity effects. If it is an established practice in a given
grouptooppose redistribution, andif political behavior
in that group is sufciently salient, then agents who
identify with that group will modify their own po-
litical behavior accordingly (see Dickson and Scheve
2006). Thus, many outcomes could be self-reinforcing.
By keeping d
iJ
exogenous, the present application ab-
stracts from conformity effects and focuses solely on
the status effects of redistributive policies. A second
implication of the general framework is that people
may be more likely to support redistribution if the
transfers are specically targeted to their own group
(Luttmer 2001). This application largely abstracts from
heterogeneity within income groups and focuses on
general interest redistribution.
SOCIAL IDENTITY EQUILIBRIA
I begin the analysis by looking at how the preferred tax
rate is affected by the group with whom one identies.
Let t
J
(y
i
) be the preferred tax rate of an agent with
income y
i
that identies with group J .
Proposition 1. The tax rate preferred by a poor agent
is lower if he or she identies with the nation than if he
or she identies with his or her class: t
N
(y
p
) < t
P
(y
p
).
The intuition is given in Figure 1. In each panel,
the solid curve represents a possible choice set in the
p

r
plane. When the tax rate is zero (the top point
on the curve), each agent gets his or her pretax income.
As the tax rate increases,
r
decreases monotonically,
whereas
p
initially increases but eventually decreases
as the deadweight losses of taxation outweigh the gains
from the transfers. When t = 1, material payoffs are
equal for the rich and the poor. Note that
p
reaches its
maximum when t =t =
yy
p
y
. The implications of class
identication are illustrated in panel (a). Class identi-
cation induces individuals to carein addition to their
own material payoffsabout the relative status of that
class. Therefore, the indifference curve (illustrated by
the dotted line) of a poor agent that identies with the
152
FIGURE 1. The Voters Choice
Note: In both panels, the solid curve depicts the implications of various tax rates for the posttax and transfers incomes of the poor (
p
)
and the rich (
r
). When no taxes and no transfers are made,
r
= y
r
> y
p
=
p
. This is the point denoted t = 0. Increasing the tax rate
implies moving down along the curve. The point that maximizes
p
is denoted t = t. Finally, at the point denoted t = 1, full redistribution
takes place and
r
=
p
. Panel (a) shows an indifference curve of a poor agent that identies with his or her class (dotted line), and his
or her preferred tax rate. Panel (b) shows an indifference curve and the preferred tax rate of a poor agent that identies with his or her
nation.
poor class has a positive slope, yielding a higher pre-
ferred tax rate (t
P
(y
p
) >t ). National identication, on
the other hand, shifts agents social identity concerns to
the status of their nation. As noted previously, national
status may have to do primarily with variables that are
not clearly related to tax policiesin which case the
preferred tax rate would still be t. However, to the
extent that the material payoffs of the rich members of
the nation also affect national status, the indifference
curve of a poor nationalist has a negative slope, as
illustrated in panel (b). This yields a lower preferred
tax rate (t
N
(y
p
) t ). Even in the extreme case where
national status depends strongly on a Rawlsian mea-
sure of national welfare (hence, vertical indifference
curves), a national identity induces a lower ideal tax
rate than does a class identity.
It is noteworthy that for a rich agent, the effect of a
national identity on the preferred policy is not so clear
cut. It depends on the sensitivity of national status to
national material payoffs (captured by
N
1
) and, cru-
cially, on the extent to which the material payoffs of
the poor affect the evaluation of national material pay-
offs (captured by ). If these relations are sufciently
strong, then a national identity could imply a higher
ideal tax rate than does a rich-class identity (which
implies zero redistribution). The possible proredistri-
bution effect of national identity is consistent with a
prominent view in political theory, according to which
national identication can help promote redistributive
policies (e.g., Miller 1995; Tamir 1993). In a country
where (contrary to the present model) the rich set the
tax rate, but where national status is nonetheless signif-
icantly affected by the living conditions of the poor, a
national identity may indeed be proredistributive. The
evidence presented in the next section suggests that,
by and large, this is not the case in industrialized and
well-established democracies.
Let us now turn to the determination of the equilib-
rium tax rate. I rst provide the intuition for the main
result stated hereafter. Because the poor are the major-
ity and because they vote sincerely, the equilibrium tax
rate is the tax rate most preferred by the poor.
11
That
is, the tax rate is t
N
(y
p
) if the poor identify with their
11
This is an equilibrium because if all the poor identify with group
J and vote (sincerely) for t
J
(y
P
), then no poor voter can unilaterally
change the chosen tax rate, and he or she might as well vote for
t
J
(y
P
). Note also that because a single voter cannot affect the tax
rate, S
N
and S
P
are taken as given when choosing the optimal
identity.
153
FIGURE 2. Social Identity Equilibria
Note: The downward sloping curve shows S
N
S
P
(the difference between the status of the nation and the status of the poor class) as
a function of the tax rate: the higher is the level of redistribution, the lower this difference. The cutoff point on the vertical axis is the
difference in perceived distances of a poor agent from the nation and from his or her class (scaled by the utility parameters and ).
If S
N
S
P
is above (below) this cutoff, then national (class) identication is optimal for the poor. The solid step function then shows t
(the chosen tax rate) as a function of S

N
S
P
: when S
N
S
P
is low, the poor identify with their class and hence vote for t
P
(y
p
). When
S
N
S
P
is high, the poor identify with the nation and vote fort
N
(y
p
). The gure depicts a situation where both a high-tax class identity
equilibrium and a low-tax national identity equilibrium exist.
nation, and it is t
P
(y
p
) if they identify with their class.
These two tax rates are depicted on the horizontal axis
in Figure 2. Now, in SIE a poor voter identies with
his or her nation rather than with his or her class if
S
N
d
2
pN
> S
P
d
2
pP
(where lowercase p denotes
a typical poor agent
12
). If the inequality is reversed, he
or she identies with the poor class. The equilibrium
tax rate is thus a step function of S
N
S
P
. This is illus-
trated in Figure 2. For S
N
S
P
above the

(d
2
pN
d
2
pP
)
threshold, the poor identify with their nation despite
the fact that the nation is cognitively more distant from
them than their class. They hence choose the relatively
low tax rate t
N
(y
p
). For S
N
S
P
below the threshold,
they identify with their class and choose the relatively
high tax rate t
P
(y
p
).
At the same time, S
N
S
P
is itself a function of the
tax rate. A possible S
N
S
P
curve is depicted in Fig-
ure 2. The crucial property of the S
N
S
P
curve is that it
is lower at t
P
(y
p
) than at t
N
(y
p
). The intuition is simple:
a higher level of redistribution diminishes the differ-
ence in material payoffs between the rich and the poor
and hence increases the status of the poor. Further-
more, to the extent that national status is affected by
material payoffs, higher levels of redistribution reduce
national status in the [t
N
(y
p
), t
P
(y
p
)] interval (partly
due to the efciency costs of taxation).
12
Recall there is no within-class heterogeneity.
In equilibrium, S
N
S
P
is determined by the chosen
tax rate while, as pointed out, the tax rate depends on
S
N
S
P
. Depending on the parameters of the model,
a unique equilibrium or multiple ones may exist. If
perceived distance from the nation is high relative to
perceived distance from the poor class, and if national
status at t
P
(y
p
) is low relative to the status of the poor
class at that tax level, then there exists an equilibrium
where the poor identify with their class and the tax rate
is high at t
P
(y
p
). Conversely, if d
2
pN
d
2
pP
is sufciently
low relative to S
N
S
P
at t
N
(y
p
), there exists an equi-
librium where the poor identify with their nation and
the amount of redistribution is relatively low.
As Figure 2 suggests, there are situations where two
stable equilibria exist. To illustrate this possibility,
suppose the pretax income of the poor is y
p
= 50, that
of the rich is y
r
= 150, and that the poor compose 70%
of the population ( = .7). Suppose further that the
weight of group status in the utility function is = .1
and that the sensitivity of both class and national status
to the material payoff dimension is
P
1
=
N
1
= 1. Then
the preferred tax rate of a poor agent that identies
with his or her class is t
P
= .5. If national material
payoff is measured by income per capita ( = ), then
the preferred tax rate of a poor agent who identies
with the nation is t
N
= .34. This gives us the two tax
rates on the horizontal axis. Consider now the dif-
ference between national and class status. If there
154
are no exogenous factors that affect the status of ei-
ther group (namely
P
0
=
N
0
= 0), and if the material
payoff of the nations reference group is
r(N)
= 100,
then S
N
S
P
= 41.3 when t = .34 and S
N
S
P
= 20
when t = .5. Thus, if the threshold on the vertical axis
[
(d
2
pN
d
2
pP
)] lies between 20 and 41.3, two equilibria
are possible.
13
At the lowtax equilibrium(witht = .34),
the status of the poor class is sufciently low to induce
the poor to identify with the nation rather than with
the poor even though that entails a higher cognitive
cost. They thus vote for a low tax rate. But under the
high tax rate (t = .5), the poor are not that far behind
the rich in their standards of living and hence in their
status (S
N
S
P
is now only 20). They now identify with
the poor class and thus vote for the high tax rate.
The following proposition summarizes the main re-
sults.
Proposition 2.
1. An SIE exists.
2. There are generically two types of equilibria: one
with relatively high levels of redistribution and class
identication among the poor, and the other with
relatively low levels of redistribution and national
identication among the poor.
3. A low-tax national identity SIE exists if:
(a) common national attributes are sufciently
salient compared to income and class-specic at-
tributes (w
N
is high, w
C
and w
y
are low),
(b) exogenous sources of national status are suf-
ciently high (
N
0
is high,
r(N)
is low),
(c) exogenous sources of poor-class status are suf-
ciently low (
P
0
is low).
The reverse conditions ensure existence of a high-tax
class identity SIE.
4. The qualitative effect of pretax income inequality on
the equilibrium level of redistribution is ambiguous.
5. There are conditions such that both types of SIEexist.
Discussion and Possible Interpretations
Part 3(a) of Proposition 2 has to do with the effect of
the distance that citizens perceive between themselves
and their nation. The lower is d
pN
, the higher is the like-
lihood of a low redistribution equilibrium, other things
equal. It seems plausible to assume that perceived dis-
tance from the nation is largely due to slow-changing
fundamentals such as the development of a com-
mon national language and culture, as opposed to local
or class-specic cultures (see Weber 1976). However,
as the social psychology literature suggests, perceived
distances can be signicantly altered by changing the
relative salience of common national attributes versus
class-specic attributes. Thus, a common threat to all
13
For example, if = and w
y
= .03, the threshold is approximately
27. Note that for expositional simplicity the income attribute was
not normalized and is two orders of magnitude larger than the other
(binary) attributes. Hence, perceived distance in this example is prac-
tically determinedby income differences andthe associatedattention
weight w
y
.
members of the nation, salient international compe-
tition or a conict with another nation, seem likely to
make ones membership in the nation a more salient at-
tribute, thereby reducing d
pN
and increasing the likeli-
hood of a low redistribution equilibrium. In particular,
a salient national security danger is likely to enhance
a feeling that we are all in the same boatrich and
poor alike. But a national identity means less weight on
class issues andless support for redistribution. This sug-
gests that there may be an incentive for elites to hype
national threats in order to diffuse domestic claims for
more redistribution, or to soften opposition for a re-
duction in the level of redistribution.
In a similar vein, salient hardships or disasters that
disproportionately threaten the poorer segments of so-
ciety, are likely to enhance class identication among
them and increase demand for redistribution.
14,15
In
the longer run, factors suchas the transportationinfras-
tructure and the nature of the school systemwhether
it fosters similarity to the nation or class distinctions
should have a crucial effect on the pattern of identi-
cation and hence on the redistributive regime.
Part 3(b) of Proposition 2 relates to the fact that
group status may depend on dimensions other than
the material payoffs of group members. A powerful
nation, for example, is more likely to generate national
identication among its members than a weak or a
remorseful nation, other things equal. PostWorld War
II Germany is a case in point (see the cross-country
patterns in the next section). Or consider Ronald Rea-
gans military build-up and rejection of D etente. If such
14
In this context, it would be interesting to study the salience of
class vs. national attributes during the 2004 and 2008 American pres-
idential elections. Consider for example the candidates rhetoric. In
2004, even John Kerrys speeches stressed the common war against
terrorism: As Americans we are absolutely united, all of us. There
are no Democrats, there are no Republicans. As Americans we are
unitedinour determinationtodestroy, capture, kill Osama binLaden
and all of the terrorists (AP, Oct. 30, 2004). But, in 2008, with the
economic crisis deepening, even John McCain gave center stage to
Joe The Plumber, while Barack Obama further accentuated inter
class differences: Im not worried about CEOs . . . . Im not wor-
ried about the drug companies or the oil companies . . . . Theyll be
ne . . . . Im worried about the family thats trying to gure out how
they can save for their childs college education. Im worried about
the single momthat doesnt have health insurance. Imworried about
the guy who has worked in a plant for 20 years and suddenly sees
his job shipped overseas. Thats who Im worried about (Obama
infomercial, Oct. 29, 2008).
15
This mechanism can perhaps also help understand the expansion
of the welfare state following mass warfare. Scheve and Stasavage
(2008), for example, argue that the widely perceived disparity be-
tween the sacrices of those who had served in the front (partic-
ularly in World War I) and those who reaped war prots, has
led to demands for increased tax progressivity. Although fairness
considerations are central to their argument, such a phenomenon
might partly be understood in terms of this model. In its early stages,
World War Icommonly portrayed as a threat from abroadwas
accompanied by widespread national identication which seemed to
swamp working-class identication across Europe. But in the nal
stages of the war and in the years immediately following it, the
rift between the poor and the proteering rich may have become
sufciently salient to overcomefor a whilethe sense of a common
national fate. To quote Ferro (1973, 145), The same resurgence of
old quarrels came with the decline of Union sacr ee: the revival of the
workers and socialist movements, dormant since 1914, came with
the changed perspectives of the war.
155
policies enhanced Americas stature, then according to
the model they may also help explain the popularity
and political success of the Reagan tax policies even
among blue-collar workers. Part 3(c) of the proposition
makes a complementary point regarding a strong/weak
working class.
Part 4 of Proposition 2 relates to the effect of pretax
inequality. The standard median voter result is that
higher pretax inequality leads to more redistribution.
This is not necessarily the case once social identication
is allowed. The reason is that although preferred tax
rates may increase with inequality for any given so-
cial identity, changes in inequality can lead to changes
in the pattern of identication. This happens because
the level of inequality affects both perceived distances
and group status. Consider a drop in pretax inequality.
This not only reduces perceived distance of the poor
from the nation but also improves the condition of
the poor relative to the rich. Thus, in Figure 2, both
the

(d
2
pN
d
2
pP
) threshold and the S
N
S
P
curve may
shift down. If the shift in S
N
S
P
is sufciently large
relative to the other changes, the country can move
from a low-tax national identity equilibrium to a high-
tax class identity equilibrium. Therefore, it is not clear
that economies with higher pretax inequality will in
general be at higher tax equilibria.
16
The model thus suggests that we may observe rather
different levels of redistribution among economies
with similar pretax income distributions and similar
political institutions, and it points to several important
factors that can cause such differences. But the last part
of Proposition 2 says that we may observe different
levels of redistribution even when these factors are
held constant because different levels of redistribution
serve to reinforce the identication patterns that sup-
port them. Historical contingencies can thus have a
lasting effect on the redistributive system. In any case,
empirically we should expect to nd higher levels of
national identication the lower is the level of redistri-
bution, and vice versa.
Who Are the Nationalists?
Turning back to the model, two additional issues are
worth commenting on. The rst is: who are the nation-
alists? In the simple two-class setting considered here,
the answer is rather stark: the poor.
Proposition 3. Unless the status of the poor class is
sufciently higher than that of the rich class, then in any
SIE in which the rich identify with the nation, so do the
poor. However, there exist SIE where the poor identify
with the nation, but the rich do not.
Essentially, as long as there are no exogenous factors
that endow the poor class with a signicantly higher
status than that of the rich, the poor are more likely
than the rich to identify with the nation. Two factors are
16
This is consistent with most of the empirical studies reviewed
in Benabou (1996) and Alesina and Glaeser (2004). See, however,
Milanovic (2000).
at work here. First, the more immediate social group
the poor belong tonamely, the poor classhas lower
status than the immediate social group of the rich. Sec-
ond, most of the members of the nation are poor, which
means that poor agents are in general more similar to
the national prototype than the rich are.
As we see inthe next section, this simple result is con-
sistent with data available from most modern econom-
ically advanced democracies. Indeed, in these nations
it seems reasonable to assume (as the model does) that
the status of social classes is positively correlated with
the economic conditions of these classes (see Weiss and
Fershtman 1998). It is also reasonable to assume that
perceived distance fromthe nation is not systematically
higher among the poorer segments of society.
However, this need not always be the case. Consider
18th- and 19th-century Europe, where productivity re-
sides with the bourgeoisie, but status still resides to
a signicant extent with the aristocracy. Furthermore,
at these early stages of industrialization, much of the
poor population lives in rural areas, often separated
from the rest of their nation by cultural, linguistic, and
geographic barriers. Perceiveddistance fromthe nation
is thus higher for the rural poor than for the urban mid-
dle class (Weber 1976, part I). Similar conditions might
also characterize some developing countries today and
colonized countries in the past, where much of the poor
population inhabits remote rural areas, and where the
middle class does not enjoy as high a status as it would
based on its domestic economic position. Under these
conditions, the urban middle class is more likely to hold
a national identity than are the rural poor.
17
Heterogeneity of the Lower Class
A nal point raised by the model concerns within-class
heterogeneity. This issue merits a separate study, pri-
marily because the sources of heterogeneity may well
be related to other bases of identication (e.g., ethnic
groups).
18
Nonetheless, this model allows us to make
17
To see this, consider an economy with three income levels y
p
<
y
m
< y
r
and accordingly three classes. Continue to assume no within-
class heterogeneity. If status is largely determined by income, then
the middle class has a higher status than the poor class. Thus, the
status effect still works to make the poor more likely than other
classes to hold a national identity in SIE. However, middle-income
agents may well be closer tothe national prototype thanare either the
poor or the rich. Hence, the distance effect works to make the middle
class more nationalistic than either the poor or the rich (the latter
group, having a high class status, may be the least likely to hold a
national identity). Such a result is even more likely if the middle class
is disadvantaged on various dimensions of status (e.g., if it is deprived
of political power or is threatened by other groups). Nonetheless, as
common national attributes become more prevalent and salient (e.g.,
due to a common national language that overcomes local dialects or
a road system that facilitates a perception of similarity to distant
fellow nationals), the distance effect diminishes in importance (in
the limit, when w
N
= 1, all distances are zero). Now, as class status
becomes more closely correlated with income, we are back to the
basic result in Proposition 3, whereby the poorer segments are more
likely to hold a national identity.
18
Analyzing the interaction between identication patterns and the
redistributive regime in this case should thus model not only the
heterogeneity in attributes, but also the determinants of the groups
156
the following simple point, which relates less to the
identication patterns of minorities and more to those
of the majority population.
Proposition 4. Suppose a proportion (0, .5) of
the poor agents possess some salient attribute x, that
differentiates them from the rest of the population.
Then, the equilibrium level of redistribution is weakly
lower (1) the higher is , and (2) the more salient
is attribute x compared to income and class-specic
attributes.
The intuition is as follows: because < .5, the piv-
otal voters turn out to be the poor agents who do not
possess attribute x. Now, as increases, these agents
may dissociate themselves from their classwhich be-
comes less similar to themselvesand identify with
their nation. This implies a lower level of redistribu-
tion.
19
Similarly, as attribute x becomes more salient
relative to attributes common to all poor agents, these
pivotal voters perceive themselves as more different
from the poor class and may turn to national identi-
cation.
This simple point might partly help explain the shift
of signicant portions of the working class in West-
ern Europe from socialist to nationalist parties (Ignazi
2003; Kitschelt 1996; Lubbers, Gijsberts, and Scheepers
2002). As Schain, Zolberg, and Hossay (2002, 11) put
it, certainly the most common explanatory factor put
forward for the electoral breakthrough of the radical
right are immigration and the presence of immigrants.
Such a relationship is readily interpretable in terms of
Proposition 4. Immigration of foreign workers affects
primarily the composition of the poorer segments of
society. As a consequence, identifying oneself as part
of the working class is not as self-evident for the na-
tive workers as it used to be. Thus, support for general
interest redistribution declines.
20
Note that this result
does not hinge on any (empirically disputed) adverse
effects of immigration on the pretax economic condi-
tions of the natives: pretax incomes are held constant in
Proposition 4.
Finally, part (2) of the propositionpoints toa possible
channel thateven before taking into account ethnic
identicationcan relate the salience of attributes that
divide the lower class to national identication and to
redistributive politics.
status. In this context, one should probably also consider policies
targeted at the specic groups and not just redistribution from rich
to poor. For these reasons, a full-edged analysis of within-class
heterogeneity is beyond the scope of this article.
19
Of course, the effect of is even stronger if a higher proportion
of xs in the poor class lowers the status of that class.
20
Consistent with this interpretation, Soroka, Banting, and Johnston
(2006) nd a negative relationship across OECD countries between
changes in social spending and immigration ows from 1970 to 1998.
In a similar vein, Proposition 4 is consistent with the old argument
that links the absence of a strong labor movement in the United
States tothe highly heterogenous immigrationthat shapedthe Amer-
ican labor force (see Lipset and Marks 2000).
EVIDENCE: NATIONAL IDENTITY AND
REDISTRIBUTION
This section seeks to uncover some of the empirical
relationships between national identication and redis-
tribution, and verify whether they are consistent with
the model. I examine three implications of the model:
1. Support for redistribution decreases with national
identication among the nonwealthy (Proposition
1).
2. The poor are more likely than the rich to identify
with their nation (Proposition 3).
3. Across democracies, there is a negative correlation
between levels of national identication and levels
of redistribution (Proposition 2).
I concentrate on the national identity side of the
model and not the class identity side for two reasons.
First, in contrast with data on national identication,
data on class identication are hard to obtain. Al-
though many surveys (e.g., the GSS, Eurobarometer,
WVS) ask respondents what social class they belong
to, this is at best a self-categorization question, akin
to asking which nation do you belong to? It tells
us little about identication as dened in the model.
21
Second, the models predictions with respect to class
identication seem less contentious. It would not be
too surprising to nd that low-income individuals with
a strong working class identity desire more redistri-
bution than their comrades with weak class identi-
cation. Similarly, it would hardly be ground-breaking
to discover that class identication and class voting
is more common in Western Europe, where there are
higher levels of redistribution, thaninthe UnitedStates
(see Evans 2000; Lipset andMarks 2000). However, the
models implications regarding national identication
are more novel and beg empirical investigation.
I use both micro and cross-country data. The mi-
cro data come from the WVS (waves 13) and the
ISSP: National Identity, 1995. Each survey covers more
than twenty democracies during the 1990s. The primary
measure of the extent of redistribution at the national
level comes from the LIS. I limit the analysis to democ-
racies, dened as countries with a Polity IV combined
score of at least 6 (following the Polity coders recom-
mendation).
As noted in previous sections, the models as-
sumptions appear better suited to industrialized, well-
established democracies. For example, the model as-
sumes that nation and (income-based) social class form
the major social groups with whomindividuals identify.
But, particularly in less advanced economies, the more
prominent social groups might be based on region, di-
alect, religion, or caste. The model also assumes that
redistributive policies reect the policy preferences of
the majority of the population. However, in countries
that have only recently turned democratic, this may not
be the case. To help evaluate whether the model offers
21
Indeed, the class question often does not even yield a good mea-
sure of self-categorization because most surveys do not allow the
respondent the option of not belonging to any class.
157
a better account for some countries than for others,
the individual-level analyses are performed country by
country, and for a broad set of countries. Similarly,
I report cross-country data both for well-established
democracies and for recently democratized countries.
Preferences for Redistribution by Income
and National Identication
The denition of social identity requires that an agent
care about the status of his or her group. In experimen-
tal studies, such preferences can be directly inferred
from behavior. In larger empirical studies, we have
to rely on survey questions. Ellemers, Kortekaas, and
Ouwerkerk (1999) show that in-group favoritism in al-
locationdecisions is capturedby questions oncommit-
ment to the group. These consist of agreement to such
statements as I would like to continue working with
my group or I dislike being a member of my group.
Consistent withthis nding, results fromanexperimen-
tal study using natural groups in a political-economy
game, show that willingness to forego material payoffs
in order to benet the group is best correlated with
responses to the items I am proud to be a member
of my group and when someone criticizes my group
it feels like a personal insult (Klor and Shayo 2008).
In both studies, in-group favoritism is not captured by
mere self-categorization statements such as I am sim-
ilar to other members of my group. Now, the WVS
contains a question asking: How proud are you to
be [e.g., French]? answered on a scale of 1 to 4 (very
proud, quite proud, not very proud, andnot at all
proud). This question seems reasonably well suited to
capture the notion of national identity.
22
As mentioned
previously, no such question exists with respect to class
identity.
The WVS also asks respondents to rank on a scale
from 1 to 10 whether incomes should be made more
equal or whether we need larger income differences
as incentives for individual effort. This question cap-
tures preferences over the type of policies studied in
the model, namely, ones that make incomes more equal
(as opposed, for example, to policies designed to se-
cure a minimal standard of living for the poor). These
data can be used to examine the rst implication of
the model. The analysis is performed only on those
surveys in which detailed data on respondents income
are retrievable (see Appendix C).
Figure 3 presents nonparametric estimates of the
expected support for redistribution as a function of
log household income. Panel (a) shows advanced
economies (countries with real gross domestic product
[GDP] per capita at least 50%that of the UnitedStates)
and panel (b) shows less advanced economies. In each
survey, the population is divided into two groups by
level of pride in ones nation. A regression function
is then estimated for each of the two groups, using
Fan (1992) locally weighted regressions. The rst group
22
The ISSPprovides better measures of national identity, and is used
extensively in the next subsections but it does not contain data on
attitudes toward redistribution.
(shown by the solid lines) includes those who are very
proud to be members of their nation. The other group
(dashed lines) includes the rest.
The rst thing to note is that within each group,
support for redistribution tends to decrease with in-
come in most surveys. However, the striking result is
that in most advanced economies, people who identify
more strongly with their nation prefer a lower level of
redistribution than people with low levels of identi-
cation and similar income. This pattern seems to hold
in Austria, Britain, Canada, Finland, Germany (East
and West), Japan, the Netherlands, Sweden, Switzer-
land, Taiwan, and the United States. The only advanced
economies where this relationship is not apparent are
Belgium, Italy, and Spain.
Outside the industrial world, the evidence is much
more mixed. There is often no clear difference be-
tween the two groups in the support for redistribu-
tion. One possibility is that in less economically ad-
vanced countries, social groups that are left out of this
modelsuch as the region, the religious community,
or the casteplay a prominent role. This might also
explain the absence of a clear effect in Belgium, Italy,
and Spain. If the predominant immediate social group
is not the class but, say, the region, then it is not clear
that a shift to a national identity would generally imply
less support for redistribution. Catalonia, for example,
is a relatively rich region. Shifting from a Catalan to a
national Spanish identity might therefore increase sup-
port for redistribution.
23
An alternative conjecture is
that the difference inthe patterns observedinadvanced
and in less advanced economies has to do with differ-
ences in the party system. Exploring these possibilities
is a matter for future research.
24
The main nding at
this stage is that in industrialized democracies, national
identication tends to be associated with reduced sup-
port for redistribution (for a given income).
23
The WVS data from Spain are not conclusive regarding this spe-
cic possibility. In the subsample of the 1990 survey conducted in
Catalonia (N = 380 with the requisite data), pride in the nation is
indeed strongly and positively associated with support for redistribu-
tion, whereas the association is negative in the rest of Spain. But in
the 1996 Catalan subsample (N = 102 with the requisite data), the
association is weak and not robust to including various demographic
controls. The data are similarly limited and inconclusive regarding
Italys northern regions. See also the discussion of Figure 7.
24
It might be noted, however, that the (within-country) estimated
effect of national identicationonpreferences for redistributiondoes
not seem to be associated (across countries) with some prominent
features of the party and electoral systems. This effect is not sig-
nicantly associated with the effective number of electoral parties
(Laakso-Taagepera index), the type of the electoral system (ma-
joritarian, proportional, multitier, or mixed) or the type of exec-
utive (parliamentary democracy, mixed democracy, or presidential
democracy). See Golder (2005) for data and denitions. It is also not
signicantly associated with Lijpharts (1999, Table 5.3) index of the
number of issue dimensions of partisanconict. The effect of national
identication is somewhat more strongly correlated with ethnic frac-
tionalization (Fearon 2003) and with GDP per capita ( = .25 and
.34, respectively; the correlation with effective number of parties is
.1 and with number of issue dimensions .09). This could be consistent
with the conjecture that prominent nonclass cleavages can make the
assumptions made in the model inadequate, but obviously much
further research is required.
158
FIGURE 3. Support for Redistribution by National Identity and Income
a. Advanced Economies
4
.
5
5
5
.
5
6
6
.
5
7
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
11 11.5 12 12.5 13
log Income
Austria 90
3
4
5
6
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
12.5 13 13.5 14 14.5
log Income
Belgium 90
3
4
5
6
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
7.5 8 8.5 9 9.5 10
log Income
Britain 90
3
3
.
5
4
4
.
5
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
9 9.5 10 10.5 11 11.5
log Income
Canada 90
3
.
5
4
4
.
5
5
5
.
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
10.5 11 11.5 12 12.5
log Income
Finland 90
2
.
5
3
3
.
5
4
4
.
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
9 9.5 10 10.5 11
log Income
E Germany 90
3
.
5
4
4
.
5
5
5
.
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
10 10.5 11 11.5
log Income
W Germany 90
2
3
4
5
6
7
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
15 16 17 18 19
log Income
Italy 90
4
4
.
5
5
5
.
5
6
6
.
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
14.5 15 15.5 16 16.5
log Income
Japan 90
4
4
.
5
5
5
.
5
6
6
.
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
14.5 15 15.5 16 16.5
log Income
Japan 95
3
.
5
4
4
.
5
5
5
.
5
6
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
9.5 10 10.5 11 11.5
log Income
Netherlands 90
5
6
7
8
9
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
13 13.5 14 14.5 15 15.5
log Income
Spain 90
3
4
5
6
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
13 13.5 14 14.5 15 15.5
log Income
Spain 96
4
4
.
5
5
5
.
5
6
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
11 11.5 12 12.5 13 13.5
log Income
Sweden 96
5
5
.
5
6
6
.
5
7
7
.
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
10 10.5 11 11.5
log Income
Switzerland 96
3
3
.
5
4
4
.
5
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
11.5 12 12.5 13 13.5 14
log Income
Taiwan 95
4
4
.
5
5
5
.
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
9 9.5 10 10.5 11
log Income
USA 90
5
5
.
5
6
6
.
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
9 9.5 10 10.5 11 11.5
log Income
USA 95
Very Proud
Less Proud
Finally, although it is impossible to assert that these
surveys contain representative samples of the rich, it is
interesting that there appears to be little evidence that
national identity systematically enhances support for
redistribution among the rich.
25
25
Out of the eighteen surveys of advanced economies, Figure 3 sug-
gests such a pattern in no more than seven surveys (Italy, Spain
90, Sweden, Switzerland, USA 90, and possibly Finland and West
Another way of looking at these data is presented
in Table 1, which reports OLS regressions of the sup-
port for redistribution on log income and dummies for
level of national pride, controlling for sex, age, years
of education, and log household size.
26
A separate
Germany). Among less advanced economies, such a pattern may be
observed in Brazil, Bulgaria, India, and Venezuela.
26
The results are very similar without controlling for these additional
variables or when using ordered probits. I report OLS estimates for
159
FIGURE 3. Continued
4
4
.
5
5
5
.
5
6
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
13 14 15 16
log Income
Brazil 90
4
6
8
1
0
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
12 14 16 18
log Income
Bulgaria 98
3
3
.
5
4
4
.
5
5
5
.
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
12 13 14 15
log Income
Chile 90
4
5
6
7
8
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
9 9.5 10 10.5 11
log Income
Estonia 96
3
4
5
6
7
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
11 11.5 12 12.5 13 13.5
log Income
Hungary 90
3
.
5
4
4
.
5
5
5
.
5
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
9 9.5 10 10.5 11 11.5
log Income
India 90
3
4
5
6
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
6.5 7 7.5 8 8.5
log Income
Latvia 96
2
4
6
8
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
10 11 12 13 14
log Income
Macedonia 97
5
6
7
8
9
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
12.5 13 13.5 14 14.5 15
log Income
Portugal 90
4
6
8
1
0
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
14 15 16 17 18 19
log Income
Turkey 90
4
.
5
5
5
.
5
6
6
.
5
7
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
18 19 20 21 22
log Income
Turkey 96
0
2
4
6
8
S
u
p
p
o
r
t

f
o
r

R
e
d
i
s
t
r
i
b
u
t
i
o
n
12 13 14 15 16
log Income
Venezuela 96
b. Less Advanced Economies
1.WVS data. Locally weighted regressions, Fan (1992), with quartic kernels.
2. Support for redistribution is on a 1 to 10 scale and is measured relative to the level of inequality in the specic country and year (see
text for details).
3. Each survey population is divided according to whether respondents are very proud to be members of their nation (the highest
possible level). The solid line is the regression function of support for redistribution among the very proud. The dashed line is that
regression for respondents with lower national pride.
4. Household income is in local currency, bandwidths vary accordingly from .3 in Britain and West Germany to .9 in Turkey. The top
or bottom income category is dropped if it contains less than 1% of the relevant sample. Thus the bottom category is dropped in USA
95, and the top category is dropped in Brazil 90, Hungary 90, India 90, Italy 90, Spain 96, Turkey 90, USA 90, and Venezuela 96. Both
top and bottom 1% are dropped in Macedonia 97. The observed hump shapes in Finland 90 and Sweden 96 are due to the bottom
category, containing 15 (2.3%) and 14 (2.6%) observations, respectively. The hump shape in USA 95 is due to the second category,
with 71 observations.
5. Economies are divided into Advanced and Less Advanced according to whether real GDP per capita (PWT 6.1) is less than 50%
of USA real GDP per capita. E. Germany 90 is classied as advanced using either PWT 5.6 for E. Germany 1988 or PWT 6.1 for
Germany 1990.
regression is reported for each survey. The results show
a negative relationship between income and prefer-
ences for redistribution in almost all countries. Fur-
thermore, people who profess to be very proud of
being members of their nation appear to support re-
ease of interpretation. I refrain from pooling the data both to allow
a comparison of patterns between individual countries and because
the variables are not equivalent across surveys. In particular, the
attitude to redistribution is stated in reference to the local level
of income inequality. Finally, to make sure that the national pride
dummies are not picking up some nonlinear effect of income, I
repeated the estimations with nonlinear terms for income up to a
third-order polynomial. The estimated coefcients on the national
pride variables were unaffected.
distribution signicantly less than people who profess
to be not proud or not at all proud, controlling for
income and schooling. The point estimates are nega-
tive in 26 out of 30 available surveys and appear very
large when compared to the effect of income. If taken
literally, the point estimates imply that moving from
not being proud to being very proud of ones nation is
equivalent in terms of attitudes toward redistribution,
to having ones household income multiplied by a fac-
tor of between 1.5 and 3 in most western democracies.
The estimated effect is exceptionally large in the two
surveys from the United States. Consistent with the
nonparametric estimations, the relationship between
national pride and preferences for redistribution is
160
TABLE 1. Support for Redistribution, Income, and National Pride
log Income Very Proud Quite Proud N
Austria 90 .903
(.172) .638
(.318) .301 (.319) 1,323

Belgium 90 1.152
(.182) .152 (.217) .120 (.188) 1,517

Brazil 90 .324
(.083) .128 (.249) .062 (.271) 1,622

Britain 90 .868
(.120) .572
(.285) .316 (.285) 1,046

Bulgaria 98 .373
(.154) .297 (.285) .239 (.283) 767

Canada 90 .646
(.140) .715
(.332) .436 (.339) 1,422

Chile 90 .503
(.118) .373 (.261) .436 (.271) 1,441

E Germany 90 .548
(.249) .715
(.212) .359
(.181) 1,181
Estonia 96 .895
(.197) .229 (.255) .225 (.209) 762

Finland 90 .835
(.284) .722
(.371) .529 (.362) 549

Hungary 90 1.204
(.181) .171 (.282) .457
(.276) 918
India 90 .395
(.113) .409 (.261) .217 (.285) 2,279

Italy 90 .771
(.136) .255 (.261) .109 (.245) 1,363

Japan 90 .951
(.186) .872
(.217) .588
(.191) 723
Japan 95 1.092
(.180) .381
(.213) .281
(.170) 770
Latvia 96 .610
(.146) .977
(.236) .299 (.182) 879

Macedonia 97 .299
(.112) .504 (.420) .09 (.478) 509

Netherlands 90 .936
(.152) .454
(.222) .447
(.180) 752
Portugal 90 .721
(.149) .229 (.306) .120 (.300) 1,089

Spain 90 .766
(.105) .694
(.151) .701
(.146) 3,180
Spain 96 .244 (.172) .202 (.392) .136 (.412) 842
Sweden 96 .691
(.167) .226 (.250) .079 (.249) 867

Switzerland 96 1.234
(.211) .763
(.294) .480
(.253) 887
Taiwan 95 .183 (.121) .594
(.232) .051 (.169) 1,137

Turkey 90 .468
(.119) 1.747
(.341) 1.723
(.366) 968
Turkey 96 .467
(.125) 1.549
(.308) .991
(.341) 1,782
USA 90 .240
(.126) 2.063
(.529) 1.611
(.537) 1,560
USA 95 .358
(.123) .904
(.530) .672 (.541) 1,310

Venezuela 96 .403
(.151) .021 (.788) .761 (.917) 1,059

W Germany 90 1.091
(.185) 1.253
(.205) .740
(.154) 1,600
WVS data.
OLS, robust standard errors in parentheses.
Each row is a separate regression.
Dependent variable is support for redistribution, ranging from 1 (We need larger income differences as incentives
for individual effort) to 10 (Incomes should be made more equal).
Reported are the estimated coefcients on log-household income and two dummies for national pride: very proud
and quite proud. Omitted categories are not proud and not at all proud.
All regressions control for log of household size, years of schooling, sex, age, and age squared, except Turkey 1990,
which does not control for schooling, and Taiwan 95, which does not control for household size. Missing values for
household size and schooling are dummied out.
Denotes signicantly different from zero at the 10% level.

statistically signicant in most industrialized countries,
but weaker in the less advanced countries. Finally, the
third column of Table 1 shows that, as expected, the
effect of being quite proud is generally smaller than
that of being very proudalthough it retains a neg-
ative sign in almost all surveys.
National Identication by Income
The model suggests that low-income individuals
having less to be proud of in their immediate social
group compared with the rich and being more sim-
ilar to the representative agent in their nationwill
generally tend to identify more strongly with the na-
tion. I now verify whether this claim is consistent with
available data. I use detailed micro data from the ISSP
1995 National Identity module that contains surveys
from 22 democracies. Results from the WVSusing
the cruder measure of national identity employed in
the previous subsectionare qualitatively similar. The
ISSP includes the following six items that seem to cap-
ture our notion of national identity (see the discussion
in the previous subsection).
How much do you agree or disagree with the following
statements? [1. Agree strongly; 2. Agree; 3. Neither agree
nor disagree; 4. Disagree; 5. Disagree strongly. R = Re-
spondent]
1. I would rather be a citizen of (Rs country) than of
any other country in the world.
2. There are some things about (Rs country) today
that make me feel ashamed of (Rs country).
3. The world would be a better place if people from
other countries were more like the people in (Rs
country).
161
TABLE 2. National Identication, Income, and Years of Schooling
(1) (2)
Nation log Income N log Income Years of Schooling N
Australia .169 (.110) 1,889 .037 (.127) .100
(.046) 1,889
Austria .520 (.338) 698 .530 (.338) .018 (.021) 698
Bulgaria .538
(.189) 633
Canada .228 (.181) 1,106 .288 (.200) .195
(.031) 1,081
Czech Rep. 1.033
(.296) 593 1.005
(.298) .012 (.011) 591

E-Germany .870
(.443) 433 .991
(.422) .051
(.014) 417
Great-Britain .793
(.181) 805 .823
(.179) .034
(.014) 805
Hungary 1.084
(.271) 734 1.020
(.277) .044 (.029) 734

Ireland .530
(.178) 817 .471
(.191) .030 (.037) 813

Italy .807
(.259) 1,017 .120 (.270) .216
(.032) 1,017
Japan .776
(.237) 782 .777
(.238) .009 (.010) 778

Latvia .346 (.221) 468 .215 (.235) .094
(.046) 467
Netherlands .952
(.183) 1,174 .677
(.185) .153
(.028) 1,174
New Zealand .502
(.195) 787 .902
(.269) .025 (.024) 368

Norway .647
(.199) 1,083 .783
(.211) .019
(.005) 1,010
Poland 1.150
(.172) 1,005 1.081
(.176) .038
(.022) 1,005
Slovak Rep. .733
(.246) 1,012 .735
(.246) .001 (.008) 1,012

Slovenia .826
(.301) 463 .780
(.303) .011 (.008) 459

Spain .910
(.222) 714 .901
(.225) .009 (.005) 700

Sweden .999
(.245) 882 .689
(.261) .110
(.039) 826
United-States .516
(.110) 1,045 .355
(.165) .160
(.091) 1,045
W-Germany 1.097
(.337) 900 .894
(.341) .022
(.009) 875
ISSP 1995 data.
OLS, robust standard errors in parentheses.
Dependent variable is national identication scale.
Each row reports the coefcient on the log of household income from two separate regressions. The regressions in column
(1) do not control for years of schooling, whereas those in column (2) do, with the estimated coefcient reported. Samples do
not include noncitizens. All regressions control for sex, age, and log of household size. Missing values for household size are
dummied out.

4. Generally, (Rs country) is a better country than
most other countries.
5. When my country does well in international sports,
it makes me proud to be citizen of (Rs country).
6. (Rs country) should follow its own interests, even
if this leads to conicts with other nations.
Although all items gauge feelings of national pride,
items 2 and 5 are conditional on transitory conditions
(things about my country today), and may thus be
less suitable to capture national identication. The es-
timated associations of each item with income are de-
scribed in footnote 27. As a way of summarizing the
data, I do the following. First, I construct a national
identity scale from these six items. Answers to each
item are scored from 0 to 4, with a higher score rep-
resenting the more nationalist answer, and the items
are then summed up with equal weights. The resulting
scale ( = .61) takes values in {0, 1, 2, . . . , 24}. Second,
I estimate a linear regression model using this scale
as the dependant variable and log income as explana-
tory variable, controlling for log household size, sex
and age. The results are presented in Table 2. The
data seem overwhelmingly supportive of the notion
that poorer people tend to identify more strongly with
their nation. A negative relationship between income
and the national identication scale is apparent in all
countries surveyed. The relationship generally holds
also when controlling for years of education (column
2). The results are even stronger when using a four-item
scale that does not include items 2 and 5 to measure
national identication (not shown).
27
Cross-Country Patterns
Finally, we come to the overall levels of redistribution
and national identication. According to the model,
27
A more detailed analysis revealed similar patterns. Specically,
for each country and each of the six national pride items, an ordered
probit model was estimated with the national identity variable as the
dependent variable and with log of income, log of household size, sex,
and age as independent variables. This procedure was repeated with
controls for years of schooling. The results were as follows. For items
3, 4, and 6, the estimated coefcient on log income is negative in all
surveys: the higher the income, the lower is the extent of national
identication. This effect is statistically signicant in between 17 to 19
of the 22 surveys. This pattern generally also holds when controlling
for years of education. For item1, the estimatedcoefcient onincome
is generally negative but is statistically signicant in only 13 of the 22
surveys. Finally, items 2 (shame) and 5 (sports) indeed showa weaker
relationship to income. Item 5 gets the expected sign in almost all
countries, but the effect is statistically signicant in only 7 of them.
Item 2 has the expected sign in only about half the surveys and
is statistically signicant in only 4 surveys (however, all signicant
coefcients have the expected sign: richer people are more ashamed
of their country).
162
in equilibrium we should expect high levels of redis-
tribution to be accompanied by relatively low levels
of national identication and vice versa. Because both
variables are endogenous, this subsection only exam-
ines correlations.
To measure the extent of actual redistribution as
dened by the model, we need data on both pretax
and posttax income. The best available data that are
reasonably comparable across countries are the LIS
data compiled by Milanovic (2000). For each country
participating in the LIS, these include the distributions
of household percapita factor income and disposable
income. Factor income is dened as pretransfer and
pretax income, and includes wages, income from self-
employment, income from ownership of physical and
nancial capital, and gifts. Disposable income is equal
to factor income plus all government cash transfers
minus direct personal taxes and mandatory employee
contributions. As a measure of the extent of redistri-
bution to the poor class, I use the share gain of the
bottom quintile, dened as the difference between the
share of the bottom quintile in factor and disposable
income. For example, if the bottom quintile receives
1% of total factor income, while the same people re-
ceive 10% of total disposable income, the share gain
is 9 percentage points.
28
I match these data with mea-
sures of national identication from the ISSP 1995 and
the WVS, using the closest available LIS data point.
Note that because individual income data are no longer
required, we can use the entire set of democracies cov-
ered by the WVS between 1981 and 1998.
Figure 4 presents the association between redistri-
bution levels and national identication using the ISSP
1995. The horizontal axis measures the median of the
six-item national identity scale described previously.
Onthe vertical axis is the share gainof the bottomquin-
tile. Panel (a) presents all democracies participating in
the ISSP with available data on the share gain. Panel
(b) concentrates on established democracies, dened
as democracies with at least ten years since the last
substantive change in authority characteristics (dened
as a 3-point change in the Polity score). This excludes
countries that are less likely to have reached equilib-
rium by the time of these surveys (in this case, the
transition countries of Eastern Europe). Both panels
reveal a striking negative relationship. The association
is particularly clean when we focus only on the long-
established western democracies, with Germany ex-
hibiting very low national pride and very high levels of
redistribution, and the United States among the proud-
est and least redistributive countries. To get a sense of
the strength of the association, the R
2
from regressing
the share gain on national identication alone is .49
in the entire sample and .72 in the sample without the
transition economies.
Figure 5 repeats this exercise with the larger set
of surveys available from the WVS. On the horizon-
tal axis, we now have the estimated fraction of the
28
The share gain of the bottom quintile offers a sharp measure of
redistribution to the lower class. Results are more noisybut qual-
itatively similarwhen using the share gain of the bottom half. See
the discussion of Figure 8 for yet another measure of redistribution.
population in each country professing the highest level
of national pride. The pattern is again extraordinarily
clear, especially when focusing on established democ-
racies. The R
2
is .6 for established democracies and
.25 for the entire sample. It is important to note that
the relationship is not simply driven by cross-Atlantic
differences and is remarkably strong within western
Europe. It is also noteworthy that this pattern holds
despite the commonly held view that the welfare state
makes Europeans proud of their country: the more
redistributive countries are actually characterized by
less national pride.
29
Most of the negative relationship comes from cross-
country variation and not variation within coun-
tries over time. Movements within countriesin both
dimensionsare very small relative to the differences
between countries. This suggests rather stable equilib-
ria. To see this more clearly, Figure 6 presents the same
data as in Figure 5b separately for each country on
which we have more than one observation. It may be
interesting to note that most of the movements accord
well with the model. In particular, consider the move-
ments that seem to have occurred between the early
1980s and the mid-1990s in Denmark, the Netherlands,
Norway, and Sweden. In these countries, one observes
an apparent shift to lower levels of redistribution cou-
pled with higher levels of national identication. The
reverse seems to have occurred in Canada and Spain
(and perhaps also in France and Germany), where lev-
els of redistribution increased and levels of national
identication decreased during the 1990s. Why these
changes occurred is a matter for further research. In-
deed, some of these changes may be measurement
noise. The nding to emphasize is the cross-country
pattern.
Another way of looking at the data is to add some
control for ethnic diversity, which has long been
implicated in reducing the taste for redistribution.
Figure 7 breaks the data in Figure 5b by the proportion
of ethnic minorities in the total population (the clas-
sication of countries is identical when using an ethnic
fractionalization index, see footnote 30). Specically,
panel (a) shows countries where, according to Fearons
(2003) data, the largest ethnic group made up at least
75% of the country population in the early 1990s.
Panel (b) shows countries where the largest ethnic
group comprised less than 75% of the population.
30
As Figure 7 shows, a negative relationship between
national identication and redistribution exists both
across relatively homogeneous countries and across
heterogeneous ones.
29
Recall that the survey questions used are not using the word na-
tion, which may invoke certain connotations, but ask How proud
are you to be French? (WVS) or whether a respondent would
rather be a citizen of Sweden than of any other country in the world
(ISSP).
30
The results are identical with a 70% or an 80% threshold, or with
any ethnic fractionalization (Fearon 2003) threshold between .33 and
.49 (or, indeed, with thresholds based on the cultural fractionaliza-
tion index proposed by Fearon or the index based on the Soviet
Atlas data). I present the results using the share of minorities for
consistency with the measure used in Proposition 4.
163
FIGURE 4. Redistribution and National Identity: ISSP Data
Australia
W Germany
Great Britain
United States
Hungary
Italy
Ireland
Netherlands
Norway
Sweden
Czech Rep.
Poland
Canada
Spain
Slovak Rep.
5
1
0
1
5
S
h
a
r
e

G
a
i
n

o
f

B
o
t
t
o
m

Q
u
i
n
t
i
l
e
10 12 14 16 18
National Identity Six-Item Scale, Median
N = 15. R
2
= .49
a. All Democracies
Australia
W Germany
Great Britain
United States
Italy
Ireland
Netherlands
Norway
Sweden
Canada
Spain
5
1
0
1
5
S
h
a
r
e

G
a
i
n

o
f

B
o
t
t
o
m

Q
u
i
n
t
i
l
e
10 12 14 16 18
N = 11. R
2
= .72
b. Established Democracies
Note: National identity scale from ISSP 1995 (see text for details). Share gain from LIS (Milanovic 2000). A country is a Democracy if
its combined Polity IV score is at least 6. It is an Established Democracy if the number of years since the most recent regime change
(Polity IV Regime Durability) is at least 10. Postunication West Germany is coded as an established democracy.
Figure 7 also suggests another interesting pattern.
Ethnic heterogeneity at the country level does not seem
tobe associatedwithreducedredistributioninthis sam-
ple. Belgium and Spain are highly ethnically diverse;
however, Spains level of redistribution is about aver-
age, whereas Belgiums is the highest in the sample.
Similarly, Australia, Finland, and (to a lesser extent)
the UKare relatively homogeneous but have compara-
tively lowlevels of redistribution. This seems consistent
with Proposition 4, which focuses on diversity concen-
trated in the lower class . This is a reasonable char-
acterization of ethnic diversity in the United States,
where the black (12%) and Hispanic (13%) minorities
are concentrated in the lower class. But it does not
164
FIGURE 5. Redistribution and National Identity: WVS Data
Spain 81
Italy 81
Belgium 81
Netherlands 81
Britain 81
Denmark 81
Canada 81
W Germany 81
France 81
Australia 81
Sweden 81
Norway 81
USA 81
USA 90
Ireland 90
Slovakia 90
Norway 90
Britain 90
Denmark 90
Sweden 90
Canada 90
Belgium 90
W Germany 90
Spain 90
France 90
Italy 90
Netherlands 90
Finland 90
Hungary 90
Czech 90
Taiwan 95
USA 95
Australia 95
Sweden 96
Finland 96
Norway 96
W Germany 97
Poland 96
E Germany 97
0
5
1
0
1
5
2
0
S
h
a
r
e

G
a
i
n

o
f

B
o
t
t
o
m

Q
u
i
n
t
i
l
e
.2 .4 .6 .8 1
Fraction of Population Very Proud to be [Nation]
N = 39. R
2
= .25
a. All Democracies
Italy 81
Belgium 81
Netherlands 81
Britain 81
Denmark 81
Canada 81
W Germany 81
France 81
Australia 81
Sweden 81
Norway 81
USA 81
USA 90
Ireland 90
Norway 90
Britain 90
Denmark 90
Sweden 90
Canada 90
Belgium 90
W Germany 90
Spain 90
France 90
Italy 90
Netherlands 90
Finland 90
USA 95
Australia 95
Sweden 96
Finland 96
Norway 96
W Germany 97
5
1
0
1
5
2
0
S
h
a
r
e

G
a
i
n

o
f

B
o
t
t
o
m

Q
u
i
n
t
i
l
e
.2 .4 .6 .8 1
N = 32. R
2
= .6
b. Established Democracies
Note: Fraction very proud from WVS waves 13. Share gain from LIS (Milanovic 2000). A country is a Democracy if its combined Polity
IV score is at least 6. It is an Established Democracy if the number of years since the most recent regime change (Polity IV Regime
Durability) is at least 10. The Czech and Slovak republics in 1990 are coded as democracies. Postunication West Germany is coded
as an established democracy.
t the structure of ethnic diversity in Belgium (58%
Flemming, 31% Walloon) or in Spain (68% Castillian,
17% Catalan, 6% Galician, 6% Basque).
31
To further
investigate the effects of lower-class diversity, more
31
To a certain extent, ethnic diversity concentrated in the lower class
could also characterize Australia (7% Asians and 1.4% Aborigines)
systematic data on such diversity are required. Again,
the main nding at this point is the overall correlation
between national identication and redistribution.
and the UK (3% Asians and 2% Afro-Caribbeans), which have rel-
atively low levels of redistribution, but probably not Canada (where
the French speakers form the main minority) and Finland.
165
FIGURE 6. Redistribution and National Identity Within Countries over Time
1981
1995
1981
1990
1981
1990
1981
1990
1981
1990
1990
1996
1981
1990
1981
1990
1997
1981
1990 1981
1990
1982
1990
1996
1981
1990
1982
1990
1996
1982 1990
1995
5
1
0
1
5
2
0
5
1
0
1
5
2
0
5
1
0
1
5
2
0
5
1
0
1
5
2
0
.2 .4 .6 .8 .2 .4 .6 .8
.2 .4 .6 .8 .2 .4 .6 .8
Australia Belgium Britain Canada
Denmark Finland France Germany
Italy Netherlands Norway Spain
Sweden USA
S
h
a
r
e

G
a
i
n

o
f

B
o
t
t
o
m

Q
u
i
n
t
i
l
e
Note: Fraction very proud from WVS waves 13. Share gain from LIS (Milanovic 2000). Germany WVS data are from West Germany.
FIGURE 7. Redistribution, National Identity, and Ethnic Diversity
Britain 90
Britain 81
Ireland 90
Netherlands 90
Netherlands 81
France 90
France 81
W Germany 97
W Germany 90
W Germany 81
Italy 81
Italy 90
Finland 90
Finland 96
Sweden 96
Sweden 81
Sweden 90
Norway 81
Norway 90
Norway 96
Denmark 81
Denmark 90
Australia 95
Australia 81
5
1
0
1
5
2
0
S
h
a
r
e

G
a
i
n

o
f

B
o
t
t
o
m

Q
u
i
n
t
i
l
e
.2 .4 .6 .8 1
N = 24, R
2
= .4.
a. Low Share of Ethnic Minorities
USA 90 USA 95
USA 81
Canada 81
Canada 90
Belgium 81
Belgium 90
Spain 90
5
1
0
1
5
2
0
.2 .4 .6 .8 1
N = 8, R
2
= .93.
b. High Share of Ethnic Minorities
Note: Fraction very proud from WVS waves 13. Share gain from LIS (Milanovic 2000). Share of ethnic minorities from Fearon (2003).
Countries are divided into high and low share of ethnic minorities according to whether the largest ethnic group comprises at least 75%
of the population. The gure shows established democracies only.
166
FIGURE 8. Social Expenditure and National Identity
Australia
W-Germany
Great-Britain
United-States
Austria
Italy
Ireland
Netherlands
Norway
Sweden
New-Zealand
Canada
Japan
Spain
1
5
2
0
2
5
3
0
3
5
S
o
c
i
a
l

W
e
l
f
a
r
e

S
p
e
n
d
i
n
g
10 12 14 16 18
N = 14. R
2
= .27
a. ISSP
USA 90
USA 95
USA 81
Canada 81
Canada 90
Britain 90
Britain 81
Ireland 90
Ireland 81
Netherlands 90
Netherlands 81
Belgium 81
Belgium 90
France 90
France 81
Switzerland 96
Switzerland 90
Spain 90
Spain 96
Portugal 90
W Germany 97
W Germany 90
W Germany 81
Austria 90
Italy 81
Italy 90
Finland 90
Finland 96
Finland 81
Sweden 96
Sweden 81
Sweden 90
Norway 90
Norway 96
Denmark 81 Denmark 90
Turkey 96
Japan 90
Japan 95
Japan 81
Australia 95
Australia 81
1
0
1
5
2
0
2
5
3
0
3
5
S
o
c
i
a
l

W
e
l
f
a
r
e

S
p
e
n
d
i
n
g
.2 .4 .6 .8 1
N = 42, R
2
= .25.
Without Japan: N = 39, R
2
= .48.
b. WVS
Note: Social welfare spending is total social expenditure as percentage of GDP, from OECD (2004), Social Expenditure database
(SOCX), 19802001. National identity scale is from ISSP 1995. Fraction very proud is from WVS waves 13. The gure shows
established democracies only.
As a nal robustness check, Figure 8 looks at an
indirect measure of redistribution, namely, social wel-
fare expenditure as percentage of GDP (OECD data).
Although this is a rather crude measure, a negative re-
lationship is apparent using both measures of national
identication. It is noteworthy that contrary to social
welfare expenditure, military expenditure as a share of
GDP is not negatively related to measures of national
identication (in fact, the correlation is slightly positive
using the WVS data).
It is of course possible that the cross-country cor-
relation is driven by some other factors that affect
bothnational identicationandlevels of redistribution,
without the direct link between the two postulated by
167
the model. However, the micro level results presented
previously somewhat limit the relevance of this possi-
bility. As we have seen, the relationship between na-
tional identication and redistribution also holds at the
individual level: within almost every western democ-
racy, people who identify with their nation support
less redistribution than people who do not. In almost
every country, lower income is associated with more
national identication. If the general interest long-run
redistributive system reects voters preferences, then
it would indeed be puzzling had the cross-country pat-
terns not reected the micro results. Overall then, in
advanced and well-established democracies, the data
are remarkably consistent with the model.
CONCLUSION
This article attempted to employ robust regularities
observed by social psychologists and experimental
economists in order to enhance our understanding of
the complex processes of social identication and their
interactions with economic and political variables. In
particular, the article applied these regularities to study
the interactions among national and class identica-
tion, income inequality, and political preferences.
The application to redistribution focused on the en-
dogeneity of groupstatus. Because policies affect group
status, political preferences may reect identity con-
cerns and not just economic self-interest. Thus, identi-
fying with the lower class increases support for redis-
tribution, whereas identifying with the nation tends to
reduce it. At the same time, the sociopolitical environ-
ment shapes the patterns of identication. Inparticular,
low redistribution tends to make identifying with the
lower class less appealing and can encourage identica-
tion with the nation. Both channels generate a negative
relationship between levels of redistribution and levels
of national identication. The model further allows us
to analyze the likely effects of national threats and in-
group heterogeneity on redistributive policies. It also
points out that increased income inequality does not
necessarily lead to more demand for redistribution, as
it can shift the poor away from class identication.
Data from a large set of economically advanced
democracies suggest that, for given income levels, na-
tional identication is associated with reduced support
for income equalization. At the same time, low income
is associated with national identication, even when
controlling for years of schooling. These individual-
level effects are in turn consistent with a remarkable
cross-country relationship between income redistribu-
tion and national identication. This relationship is
present in several data sources and is driven not just by
the cross-Atlantic divide, but also by differences within
Europe.
The analysis offered here can be extended in sev-
eral directions. One is to endogenize the supply of
perceived distance. In particular, it seems crucial to
examine politicians incentives to promote, say, a na-
tional language and culture versus advancing interclass
differences (or, in the shorter run, to take actions that
change the salience of national-specic or class-specic
attributes). Another extension concerns the set of so-
cial categories examinedwith ethnic identication
being a particularly important subject.
However, although this article focuses on redistribu-
tive politics in democracies, the general framework
developed here can, I believe, be fruitfully applied
to a broad range of questions (see, e.g., Penn 2008).
Given the pervasiveness of identity issues in the po-
litical arenafrom voting and partisanship to ethnic
violenceit seems important to have a unied theory
that can be used to study both the effects of group
identication on political behavior and the endogenous
formation of identication patterns. This article offers
a step toward such a theory.
APPENDIX
A. Experimental Foundations
The theoretical framework proposed in this article attempts
to capture empirical results from three strands of research
that study behavior in groups: the minimal group paradigm,
public goods experiments, and studies of social inuence.
32
This appendix briey reviews these results.
Minimal group paradigm
Consider the following allocation task. Subjects are assigned
to one of two groups. Each subject then chooses an alloca-
tion of payoffs between two other randomly chosen subjects.
The only information provided about these subjects is their
group afliation. The set of possible allocations is structured
to examine whether subjects seek to maximize total payoffs,
the absolute payoff of one participant, or the difference in
payoffs between the two. Choices are made privately and
simultaneously. There is no interaction between subjects,
and they never know the decisions of other subjects, nor
who is a member of what group. A crucial characteristic of
the minimal group paradigm (MGP) task is that a subjects
material payoffthe amount allocated to himor her by other
subjectsis independent of his or her decision. Thus, material
payoff maximization offers no sharp prediction of behavior.
Varying perceived distance. The MGP environment has been
studied extensively in experiments initiated in the late 1960s
(see especially Tajfel 1970, Tajfel et al. 1971) and repli-
cated hundreds of times (see Brewer 1979, and Bourhis and
Gagnon 2001, for reviews). Most commonly, the categoriza-
tion into groups consists of making salient an attribute that
differentiates members of one group from members of the
other. In the terminology of this article, this manipulates
perceived distances from the groups.
33
The robust result is
that despite the very weak treatment, subjects systematically
32
The standard two-person economic experiments (e.g., dictator,
ultimatum, and prisoners dilemma games) have mostly abstracted
fromgroup-related issues. Nevertheless, a growing number of studies
incorporate groups into the design of these games. Results, although
still relatively scarce, are consistent with the social identity model
proposed here. See Bernhard, Fischbacher, and Fehr (2006), Char-
ness, Rigotti, and Rustichini (2007), Chen and Li (2008), Fowler and
Kam (2007), and Goette, Huffman, and Meier (2006).
33
That the treatment indeed changes perceived distance is sup-
ported by subjects reports: categorized subjects tend to indicate that
they are more similar to their anonymous in-group members than to
the out-group members.
168
favor their in-group member. Furthermore, there is evidence
that a majority of subjects choose allocations that maximize
the relative gain in favor of the in-group member over alloca-
tions that maximize both the absolute payoff of the in-group
member and the joint payoffs.
Varying group status. Consider nowthe effect of exogenously
endowing one group with higher status. A substantial body
of research, both experimental and correlational, exists on
the implications. These studies consistently nd that people
tend to identify more with high status groups than with low
status groups.
34
As measures of identication, many experi-
mental studies use the MGP allocation task, whereas other
studies use subjects reported feelings and attitudes toward
the in-groupandthe out-group. Similar effects of groupstatus
emerge from eld studies.
35
Public goods experiments
Minimal group allocation decisions are useful for inferring
identication and studying its determinants because they
keep own material payoffs xed. Public goods experiments
examine behavior when siding with ones group involves a
material cost. In a typical experiment, subjects need to de-
cide how much of their endowment to contribute to a group
account (the public good), where benets accrue to all group
members. Each group member has a clear incentive to con-
tribute zero (this is the dominant strategy for a material pay-
off maximizer). However, overall payments are maximized if
every subject contributes his or her entire endowment.
Experimental results show that, keeping material payoffs
xed, individuals tend to contribute more to their group
when attributes that are common to all group members are
highlighted, compared to treatments that highlight attributes
that only some group members share.
36
Indeed, it has been
shown that making the membership in a randomly assigned
group sufciently salient leads to higher contributions (Eckel
and Grossman 2005) and that contributions increase when
the group is physically closer (i.e., seated in the same room
rather than in another room) (Orbell, Van-de-Kragt, and
Dawes 1988). Studies also suggest that contributions tend
to decrease with in-group heterogeneity.
37
Finally, researchers have studied situations where the pay-
off structure is augmented to include a negative effect of ones
contribution on the payoffs of out-group members. If agents
34
See, e.g., Ellemers et al. (1988), Ellemers et al. (1992), Ellemers,
Kortekaas, and Ouwerkerk (1999), Guimond, Dif, and Aupy (2002),
Hogg and Hains (1996), Mael and Ashforth (1992), and Roccas
(2003). A meta-analysis of 92 experimental studies (including 145
independent samples) with high status/low status manipulation con-
rms that high status group members favor their in-group over the
out-group signicantly more than do lowstatus group members (Bet-
tencourt et al. 2001).
35
For example, winning sports teams tend to attract more fans
(Boen, Vanbeselaere, and Feys 2002) and generate more identica-
tion (Cialdini et al. 1976). Double-major university students identify
more with their higher-status department, and are more likely to
identify with a given department the lower is the status of the other
department they major in which (Roccas 2003).
36
Brewer and Kramer (1986), De Cremer and van Vugt (1999),
Kramer and Brewer (1984, 1986), Wit and Wilke (1992).
37
See Ledyard (1995), Cherry, Kroll, and Shogren (2005), Polzer,
Stewart, and Simmons (1999), and Zelmer (2003) for experimental
results. For eld studies, see Alesina, Baqir, and Easterly (1999)
on the relationship between ethnic homogeneity and provision of
public goods across U.S. localities, and Costa and Kahn (2003) on the
relationship between company heterogeneity and cowardice in the
Union Army.
are only interested in their own material payoffs, or even only
in their groups material payoff (parochial altruism), this
should make no difference to the amounts contributed. In
practice, such intergroup competition substantially increases
contributions.
38
Conformity
Conformity refers to the act of changing ones behavior to
match the responses of others (Cialdini and Goldstein 2004).
A signicant literature on social inuence has shown that
individuals are more likely to conformto views and behaviors
of members of their own group than to those of out-group
members.
39
Furthermore, people conform more to in-group
norms of behavior when their group membership is made
more salient, by highlighting group concerns, by making ex-
plicit comparisons between the ingroup and the outgroup,
or by making group identity more salient than individual
identity.
40
To sum up: When led to perceive themselves as similar to
their group, or when their group is endowed with high status,
subjects often reveal a preference for a high relative position
of their group in comparison to other groups, and appear
to be willing to sacrice personal material gain to promote
that goal. They also show a stronger tendency to conform to
views and behaviors of members of their group than to those
of out-group members.
B. Proofs
Proof of Proposition 1:
Consider an agent that identies with the poor group. By
Denition 1 and Equation (8), his or her utility is given by
U
i
(t) =
i
(t) d
2
iP
+S
P
(t).
Substituting for the status function from Equation (6) and
using Equations (1) and (2) to substitute for
i
,
R
and
P
,
we have
U
i
(t) = (1 t)y
i
+(t t
2
/2)y d
2
iP
+
_
P
0
+
P
1
(t 1)
_
,
38
Bornstein and Ben Yossef (1994) is a particularly clean exam-
ple. See Bornstein (2003) for a review of this literature. In Born-
steins words, "real intergroup conict serves as a unit-forming factor
that enhances group identication beyond classication and labeling
alone . . . . Group identication, in turn, increases cooperation, as it
leads individual group members to substitute group regard for ego-
ism as the principle guiding their choices . . . . The participants in the
[intergroup] condition reported a higher motivation to maximize the
relative ingroup advantage than those in the [public good] condition,
and this competitive orientation was positively correlated with their
contribution behavior (1389).
39
See, e.g., Abrams et al. (1990) for behavior in an Asch line judg-
ment experiment with in-group vs. out-group confederates. MacKie,
Worth, and Asuncion (1990) and MacKie, Gastardo-Conaco, and
Skelly (1992) report that subjects changed their privately held at-
titudes toward an advocated position coming from an anonymous
in-group member but were unaffected by the same message coming
from an out-group member. Spears et al. (2001) put it this way:
unless the nature of the message is so outlandish as to bring the
whole question of group self-denition into question, we will tend
to shift towards the groups position . . . the prototypical position
(334).
40
See Cialdini andGoldstein(2004), MacKie andWright (2001), and
Spears et al. (2001) for reviews. Akerlof and Kranton (2000) survey
many eld studies that document conformity to group prototypical
behavior.
169
where y
r
y
p
> 0. Solving for the optimal tax rate under
y
i
= y
p
, we obtain
t
P
(y
p
) = min
_
y y
p
+
P
1
y
, 1
_
>t =
y y
p
y
. (9)
Similarly, for an agent that identies with the Nation, we
have (using (7))
U
i
(t) = (1 t)y
i
+(t t
2
/2)y d
2
iN
+
_
N
0
+
N
1
_
p
+(1 )
r
r(N)
__
,
which, for y
i
= y
p
, yields the following optimal tax rate
t
N
(y
p
) = max
_
0,
y y
p
+
N
1
( +y y
r
)
_
1 +
N
1
_
y
_
t. (10)
Together, inequalities (9) and (10) complete the proof.
LEMMA 1.
S
N
(t
P
(y
p
)) S
P
(t
P
(y
p
)) < S
N
(t
N
(y
p
)) S
P
(t
N
(y
p
)).
Proof: From(9) we knowthat t
P
(y
p
) >t. Sincet maximizes
p
, it must be the case that S
P
(t
P
(y
p
)) > S
P
(t ). Furthermore,
since
S
P
t
> 0 and t
N
(y
p
) t, we have
S
P
(t
P
(y
p
)) > S
P
(t ) S
P
(t
N
(y
p
)) . (11)
By a similar argument, S
N
(t
N
(y
p
)) S
N
(t). Furthermore,
S
N
t
=
N
1
[(y y
p
ty) +(1 )(y y
r
ty)] .
Since the second term in the square brackets is always nega-
tive while the rst term is negative for t >t, we have
S
N
t
< 0
for all t >t. Since t
P
(y
p
) >t this implies
S
N
(t
P
(y
p
)) < S
N
(t) S
N
(t
N
(y
p
)). (12)
Together, (11) and (12) prove the lemma.
I now prove the Proposition.
(1) Existence. Consider the following prole of identities
and actions:
g
i
= P and a
i
= t
P
(y
p
) for all i P;
g
i
= g
i
and a
i
= t
i
(y
r
) for all i R,
where g
i
{R, N} is an optimal identity for agent i Rgiven
t = t
P
(y
p
). Note all agents vote sincerely as assumed by the
political mechanism. Suppose this prole is not an equilib-
rium. Since the poor are the majority, the chosen tax rate
is t
= t
P
(y
p
). Furthermore, no agent can change the chosen
tax rate by unilaterally changing his or her vote (recall the
number of poor is greater than the number of rich by more
than one), and hence no agent i can unilaterally change either
i
, S
R
, S
P
or S
N
. Since by construction the identities of the
rich satisfy the equilibrium condition, if this prole is not an
equilibrium it must be the case that for some poor agent, the
choice of identity is not optimal. That is, at t
P
(y
p
) identifying
with P is strictly worse than identifying with N, which implies
[S
N
(t
P
(y
p
)) S
P
(t
P
(y
p
))] >
_
d
2
iN
d
2
iP
_
for some i P.
But since there is no within-class heterogeneity, both d
iN
and
d
iP
are identical for all i P. By Lemma 1, this implies
[S
N
(t
N
(y
p
)) S
P
(t
N
(y
p
))] >
_
d
2
iN
d
2
iP
_
for all i P.
Therefore, identifying with the nation is optimal for poor
agents under t = t
N
(y
p
). Thus, the following prole is an
equilibrium:
g
i
= N and a
i
= t
N
(y
p
) for all i P;
g
i
= g
i
and a
i
= t
i
(y
r
) for all i R,
where g
i
{R, N} is an optimal identity for agent i Rgiven
t = t
N
(y
p
).
(2) If in equilibrium all the poor identify with their class
then they all vote for t
P
(y
p
), which, since they are the ma-
jority, is the chosen tax rate. Similarly, if all the poor identify
with their nation, then the chosen tax rate is t
N
(y
p
) < t
P
(y
p
).
I now show that except under two very specic conditions,
these are the only types of equilibria that can occur. Note
rst that the equilibrium tax rate t
can only take one of two

values. To see this, use equations (9) and (10) and similarly
solve for the preferred tax rates of the rich to obtain
t
P
(y
p
) > t
N
(y
p
) t
N
(y
r
) t
R
(y
r
). (13)
Since the rich are a minority, (13) implies that the median
preferred tax rate must be either t
P
(y
p
) or t
N
(y
p
). This means
that there are only two cases where it is possible to have an
equilibrium where some poor identify with their class and
some identify with the nation. That is, only if the following
equality holds
(S
N
(t) S
P
(t)) =
_
d
2
pN
d
2
pP
_
for either t = t
P
(y
p
) or t = t
N
(y
p
),
where lowercase p denotes a typical poor agent. In all other
cases, all the poor strictly prefer one (and the same) identity
to the other.
(3) Restrict attention to equilibria where all the poor iden-
tify with the same group. Thus, all the poor are identical, and
we can denote a typical poor agent by lowercase p. Given that
all agents vote sincerely, no agent can unilaterally change the
tax rate. Hence, the equilibrium condition implies that
g
p

{N} if [S
N
(t
) S
P
(t
)] >
_
d
2
pN
d
2
pP
_
{P} if [S
N
(t
) S
P
(t
)] <
_
d
2
pN
d
2
pP
_
{N, P} otherwise
.
But in equilibrium t
= t
gp
(y
p
). We thus obtain the following
conditions:
(c1) t
N
(y
p
) is an equilibrium tax rate if [S
N
(t
N
(y
p
))
S
P
(t
N
(y
p
))]
_
d
2
pN
d
2
pP
_
.
(c2) t
P
(y
p
) is an equilibrium tax rate if [S
N
(t
P
(y
p
))
S
P
(t
P
(y
p
))]
_
d
2
pN
d
2
pP
_
.
From equation (5), we have
d
2
pN
= w
y
(y
p
y)
2
+w
N
_
q
N
p
q
N
N
_
2
+w
C
_
q
C
p
q
C
N
_
2
= w
y
2
(1 )
2
+w
C
(1 )
2
(14)
and
d
2
pP
= 0, (15)
170
where w
C
= 1 w
y
w
N
. From equations (6) and (7), we
have
S
N
(t) S
P
(t) =
N
0
+
N
1
_
p
(t) +(1 )
r
(t)
r(N)
_
P
0
+
P
1
(
p
(t)
r
(t))
_
=
N
0

P
0

N
1
r(N)
+
_
N
1

P
1
_
p
(t)
+
_
N
1
(1 ) +
P
1
_
r
(t). (16)
Conditions (c1) and (c2) together with equations (14) and
(15) yield the comparative statics in part 3a of the Proposi-
tion, and with equation (16), yield the comparative statics in
parts 3b and 3c.
(4) Consider a fall in the inter class difference in pretax
income y
r
y
p
, keeping all other parameters constant
(including mean national income y and the proportion of the
poor ). This means pretax income inequality falls. Tosee that
the effect on the equilibrium tax rate is ambiguous, consider
the case where = (.5, 1), and suppose the economy is
initially at a national identity equilibrium. Note rst that by
equation (14), a fall in reduces d
2
pN
. Second, from equations
(16), (1), and (2), we have
S
N
(t) S
P
(t) =
N
0

P
0

N
1
r(N)
+
N
1
(
p
+(1 )
r
) +
P
1
(
r
p
)
=
N
0

P
0

N
1
r(N)
+
N
1
y(1 t
2
/2)
+
P
1
(1 t). (17)
From (10), we obtain
t
N
(y
p
) =
y y
p
y
_
1 +
N
1
_ =
(1 )
y
_
1 +
N
1
_ . (18)
Plugging (18) into (17) and differentiating with respect to
yields
[S
N
(t
N
(y
p
)) S
P
(t
N
(y
p
))]
=
N
1
(1 )
2
y
_
1 +
N
1
_
2
+
P
1
_
1
2(1 )
y
_
1 +
N
1
_
_
. (19)
Now, if this derivative is negative in the range of were
considering (e.g., if
P
1
is sufciently small), then the fall in
causes both an increase in S
N
S
P
at t
N
(y
p
) and a drop
in (d
2
pN
d
2
pP
). Condition (c1) therefore still holds and the
economy remains at a national identity equilibrium. Note
however that the equilibrium tax rate is lower as a result of
the lower (by equation (18)).
If the derivative in equation (19) is positive in the range
of were considering (e.g., if is sufciently large), then
as falls so does S
N
S
P
at t
N
(y
p
). If this change is large
enough, condition (c1) no longer holds, which implies that
the economy switches to a class identity equilibrium. Using
(9), the tax rate in this case is
t
P
(y
p
) = min
_
_
1 +
P
1
_
y
, 1
_
. (20)
Let
0
be the interclass difference inincome before the change
and
0
> 0 the interclass difference after the change.
Then, using equations (18) and (20), the equilibrium tax rate
has increased if
_
1 +
P
1
_
(
0
)
y
>
(1 )
0
y
_
1 +
N
1
_ ,
which holds if is sufciently large.
(5) Fix all parameters of the model except
N
0
. This implies
that t
N
(y
p
), t
P
(y
p
) and d
2
pN
d
2
pP
are xed. By equation (17),
there exists a
N
0
R such that S
N
(t
N
(y
p
)) S
P
(t
N
(y
p
)) =
(d
2
pN
d
2
pP
). By condition (c1) t
N
(y
p
) is then an equilibrium.
But by Lemma 1, we also have S
N
(t
P
(y
p
)) S
P
(t
P
(y
p
)) <
(d
2
pN
d
2
pP
). Hence, by condition (c2), t
P
(y
p
) is an equi-
librium.
Consider an SIE where some rich agent identies with the
nation. From the equilibrium condition, we have
S
N
d
2
rN
S
R
d
2
rR
, (21)
where r is a typical rich agent. From equation (5), we have
d
2
rN
= w
y
2
+w
c
2
(22)
d
2
rR
= 0. (23)
Plugging (22) and (23) into (21) and rearranging, we get
S
N
(1 )
2
_
w
y
2
+w
c
_
S
P
+(S
R
S
P
) +(2 1)
_
w
y
2
+w
c
_
.
Or, using (14) and (15),
S
N
d
2
pN
S
P
d
2
pP
+[(S
R
S
P
)
+(2 1)
_
w
y
2
+w
c
__
.
Thus, unless S
R
S
P

(w
y
2
+w
c
)(2 1), the term in
square brackets is positive; hence, S
N
d
2
pN
> S
P
d
2
pP
and the poor identify with the nation.
Consider an SIE where S
N
d
2
pN
= S
P
d
2
pP
and the
poor identify with the nation. If the condition S
R
S
P
>
_
w
y
2
+w
c
_
(2 1) holds, then the rich do not identify
with the nation since S
N
d
2
rN
< S
R
d
2
rR
.
Let q
x
i
equal unity if agent i has attribute x and zero otherwise,
and call these agents type 1 and type 0, respectively. Let
w
x
> 0 be the associated attention weight and (0, 0.5)
be the proportion of poor agents that are type 1. All other
attributes are as before.
Modifying equations (14) and (15) to include the new at-
tribute, perceived distances of poor agents are
d
2
iN
=
w
y
2
(1 )
2
+w
C
(1 )
2
+w
x
(1 )
2
if q
x
i
= 1 and i P
w
y
2
(1 )
2
+w
C
(1 )
2
+w
x
()
2
if q
x
i
= 0 and i P
(24)
d
2
iP
=
_
w
x
(1 )
2
if q
x
i
= 1 and i P
w
x
2
if q
x
i
= 0 and i P
. (25)
Dene
1

_
d
2
iN
d
2
iP
_
|
q
x
i
=1 and iP
= w
y
2
(1 )
2
+w
C
(1 )
2
+w
x
_
(1 )
2
(1 )
2
_
(26)
171
0

_
d
2
iN
d
2
iP
_
|
q
x
i
=0 and iP
= w
y
2
(1 )
2
+w
C
(1 )
2
+w
x
2
(
2
1). (27)
I now show that in any SIE, the chosen tax rate is the one
preferred by the type 0 poor. From (26) and (27), we have
0
= 2w
x
(1 ) > 0. (28)
Thus, whenever type 0 poor identify with the poor class, so do
type 1 poor. Since the poor are a majority, the chosen tax rate
in this case is t
P
(y
p
). If both type 0 and type 1 poor identify
with the nation, then the chosen tax rate is t
N
(y
p
). Finally, if
type 0 poor identify with the nation and type 1 poor identify
with their class, then by (13) and by the fact that neither
the rich nor the type 1 poor are the majority, the median
voter is again type 0 poor. The equilibrium conditions are
thus still (c1) and (c2) from the proof of proposition 2, but
with (d
2
pN
d
2
pP
) replaced with
0
in the statement of both
conditions.
Next, note from(27) that
0
is decreasing in . Thus, start-
ing from an SIE with t
= t
N
(y
p
) an increase in does not
change the equilibrium tax rate (condition (c1) still holds).
Conversely, starting from an SIE with t
= t
P
(y
p
) an increase
in may imply that condition (c2) no longer holds, so that
[S
N
(t
P
(y
p
)) S
P
(t
P
(y
p
))] >
0
. This means t
P
(y
p
) cannot
be an equilibrium tax rate (type 0 poor strictly prefer to
identify with the nation under this tax rate), and the unique
equilibrium is t
= t
N
(y
p
). A similar result obtains with re-
spect to an increase in w
x
and a decrease in w
y
and w
C
.
C. WVS Household Income Data
Data are from the rst three waves of the WVS (Inglehart
et al. 2000). The WVS reports a measure of total, pretax
household income counting all wages, salaries, pensions
and other incomes that come in . . . before taxes and other
deductions. For most countries, household income is re-
ported in ten categories, where the lowest and uppermost
categories are open ended. (The United States in the second
wave has several open categories at the top. This does not
alter the form of the likelihood function used to estimate
the distribution). These income categories are not deciles,
Individual level analysis in this article uses only data from
those countries where the income categories cutoff points
are known. A minor problem is that of assigning individ-
uals a level of income based on the reported categories,
that is, of assigning a specic point within the reported in-
terval. This is done here by assuming a log-normal distribu-
tion of household income within each nation and wave, and
estimating the parameters of the distribution by maximum
likelihood. Once one has the distribution, each individual is
assigned the median point conditional on the interval within
which his or her income lies. All calculations were performed
using the sampling weights in the different nations and
waves.
REFERENCES
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American Political Science Review Vol. 103, No.

(the chosen tax rate) as a function of S

(.318) .301 (.319) 1,323

(.182) .152 (.217) .120 (.188) 1,517

(.083) .128 (.249) .062 (.271) 1,622

(.285) .316 (.285) 1,046

(.154) .297 (.285) .239 (.283) 767

(.332) .436 (.339) 1,422

(.118) .373 (.261) .436 (.271) 1,441

(.197) .229 (.255) .225 (.209) 762

(.371) .529 (.362) 549

(.181) .171 (.282) .457

(.113) .409 (.261) .217 (.285) 2,279

(.136) .255 (.261) .109 (.245) 1,363

(.236) .299 (.182) 879

(.112) .504 (.420) .09 (.478) 509

(.149) .229 (.306) .120 (.300) 1,089

(.167) .226 (.250) .079 (.249) 867

(.232) .051 (.169) 1,137

(.530) .672 (.541) 1,310

(.151) .021 (.788) .761 (.917) 1,059

Denotes signicantly different from zero at the 10% level.

Denotes signicantly different from zero at the 5% level.

(.296) 593 1.005

(.298) .012 (.011) 591

(.443) 433 .991

(.181) 805 .823

(.271) 734 1.020

(.277) .044 (.029) 734

(.178) 817 .471

(.191) .030 (.037) 813

(.259) 1,017 .120 (.270) .216

(.237) 782 .777

(.238) .009 (.010) 778

(.183) 1,174 .677

(.195) 787 .902

(.269) .025 (.024) 368

(.199) 1,083 .783

(.172) 1,005 1.081

(.246) 1,012 .735

(.246) .001 (.008) 1,012

(.301) 463 .780

(.303) .011 (.008) 459

(.222) 714 .901

(.225) .009 (.005) 700

(.245) 882 .689

(.110) 1,045 .355

(.337) 900 .894

Denotes signicantly different from zero at the 10% level.

Denotes signicantly different from zero at the 5% level.

can only take one of two

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