Social Status Inequality and Populism

Abstract

Elites’ resentment and populist sentiments have been growing in recent years. This research argues that one reason for this is growing income inequality and limited intergenerational mobility, particularly associated with persistent inequality in social status. The presented model uses mechanisms of accordance of social status to generate inequality persistence which, in turn, generates divergence in preferred policies between poor masses and rich elites. This induces the poor majority to mistrust the informed policy making by the elites and to make own, less well informed policy choices. The model generates insights that are consistent with documented empirical regularities. Additionally, our framework enables exploring mechanisms that can potentially empower the poor thereby alleviating resentment against the elites.