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WHY DO SOCIETIES WITH HIGHER AVERAGE COGNITIVE ABILITY HAVE LOWER INCOME INEQUALITY? THE ROLE OF REDISTRIBUTIVE POLICIES

Published online by Cambridge University Press:  20 July 2017

Raufhon Salahodjaev  and
Satoshi Kanazawa
Raufhon Salahodjaev*
Affiliation:
Department of Economics, Westminster International University in Tashkent, Uzbekistan Centil Law Firm, Tashkent, Uzbekistan
Satoshi Kanazawa
Affiliation:
Department of Management, London School of Economics and Political Science, London, UK Department of Clinical, Educational and Health Psychology, University College London, London, UK
*
1Corresonding author. Email: [email protected]
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Summary

Past studies suggest that, across nations, the average cognitive ability of a population is negatively associated with income inequality; societies with higher average cognitive ability tend to have lower levels of income inequality. However, it is not clear why. This paper proposes that social transfers from the wealthy to the poor may be a major mechanism by which some societies achieve lower income inequality than others, because more intelligent individuals may be more likely to have a preference for such transfers. Publicly available societal-level data were analysed in a series of multiple regression models. The empirical results in this study replicate the earlier finding that societies with higher cognitive ability have lower levels of income inequality, but the association is entirely mediated by social transfers. Social transfers therefore appear to be the primary mechanism by which societies with higher levels of cognitive ability achieve lower income inequality.

Type
Research Article
Information
Journal of Biosocial Science , Volume 50 , Issue 3 , May 2018 , pp. 347 - 364
Copyright
Copyright © Cambridge University Press, 2017 

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