ChatEconomists long assumed individuals make tax and wealth redistribution choices based on objective nationwide statistics; behavioral experiments reveal that people judge economic fairness entirely through the skewed lens of their immediate social network circles.
Why do citizens in democratic societies consistently disagree on wealth redistribution policies, even when presented with identical macroeconomic data regarding national income inequality?
Standard economic models assume rational agents possess global information regarding income distributions, overlooking the sociological reality that human beings interact within highly segregated, homophilous social circles.
Publishing in PNAS Nexus, researchers conducted large-scale network economic experiments, demonstrating that when social graphs are economically segregated, wealthy nodes perceive society as universally prosperous while disadvantaged nodes perceive widespread poverty. This localized perceptual distortion directly drives political polarization and stalls consensus on taxation.
These findings establish that combating ideological polarization and achieving economic consensus requires desegregating information networks, proving that social topology is as influential as economic self-interest in shaping democratic policy.
Social networks affect redistribution decisions and polarization
Abstract We investigate theoretically and empirically how network structure affects collective decisions about redistribution in an unequal society. We study the effects of assortativity by wealth (observing others with similar or different wealth) and visibility by wealth (observing rich or poor others) on voting for redistribution and the polarization of votes, as well as satisfaction and perceptions of fairness. We develop a computational model and test the predictions of the model in an online network experiment. The results reveal that although most social networks lead people to under-observe inequality, different structural properties produce different collective outcomes: redistribution and polarization are the lowest in networks with maximum assortativity, where participants are segregated by wealth, and the highest in networks where the rich are most visible. Furthermore, segregation keeps the poor poorest but satisfied, while observing the rich makes them dissatisfied despite becoming better off. These findings suggest that political communication and policy strategies aiming to increase support for redistribution should enhance the visibility of excessive wealth. At the same time, it is crucial to ensure that this does not exacerbate polarization and conflict.
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