Evaluating the Unequal Economy: Poverty Risk, Economic Indicators, and the Perception Gap

• DOI: http://doi.org/10.1177/10659129221075579
• Published date: 01 March 2023
• Date: 01 March 2023
• Subject Matter: Articles

Article

Political Research Quarterly

2023, Vol. 76(1) 253–266

© The Author(s) 2022

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DOI: 10.1177/10659129221075579

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Evaluating the Unequal Economy: Poverty

Risk, Economic Indicators, and the

Perception Gap

Timothy Hellwig

1

and Dani M Marinova

2

Abstract

How do citizens form evaluations of the economy? Def‌ining features of advanced capitalism like income inequality and

labor market dualization present a challenge for assessing the health of the economy based on a small set of mac-

roeconomic indicators. This is particularly true for those whose proximity to poverty and precarious labor market

position is not always ref‌lected in the off‌icial unemployment rate. For those individuals, socio-economic segrega tion and

the geographic concentration of poverty mean that information on poverty is more accessible and more salient than

information on macroeconomic indicators which needs to be explicitly sought out. Poverty risk thus shapes how

individuals evaluate the economy: at-risk individuals are less likely to rely on conventional indicators of growth and

unemployment and more likely to allocate attention to the poverty rate. Analyses of public opinion data from 27

countries provide support for this argument. We further show that those at risk of poverty know less about economic

performance by standard economic indicators but offer more accurate estimates of nat ional poverty rates. These novel

f‌indings underline the need to depart from familiar indicators and address how unequal economies structure preferences

and policy responses.

Keywords

poverty risk, economic perceptions, inequality, political knowledge, occupational unemployment

A consequence of the widening gaps between rich and

poor is that the aggregate macroeconomic indicators used

to summarize the performance of the national economy—

growth, jobs, and prices—gloss over substantial varia-

tions in how the economy performs for a great number of

citizens.

1

Evidence to this point is not hard to f‌ind. In the

United States, while overall unemployment declined

between 2011 and 2019, minorities have fared consid-

erably worse in the aftermath of the Great Recession

(Strolovitch 2013). In Germany, historically low unem-

ployment in 2015 coincided with the highest levels of

poverty since reunif‌ication, and income inequality grew

more steeply than in any other European country

(Deutsche Welle 2015). In Britain in 2016, two-thirds of

the poor lived in households where there was someone in

work (Armstrong 2018). And most recently, analysts

foretell that the economic fallout from the coronavirus

pandemic will not be felt evenly but will disproportion-

ately harm women and racial minorities (Frye 2020).

Benchmarking economic health to a handful of standard

indicators means fails to capture the well-being of many

citizens. The unequal economy requires us to revisit the

bases of a central factor in democratic politics in devel-

oped democracies: evaluations of the economy. Existing

models of opinion formation emphasize the inf‌luence of

economic indicators, individual capacity to process in-

formation, and political dispositions. These accounts,

however, overlook the role of economic diversity within

advanced capitalism. As political economy research has

shown, dualized and gendered labor markets, transfor-

mation to knowledge and gig economies, and changing

household compositions have widened gaps between the

haves and have-nots. How do people make sense of

economic conditions in unequal societies?

1

Department of Political Science, Indiana University, Bloomington, IN,

USA

2

Department of Political Science and Public Law, Universitat Aut`

onoma

de Barcelona, Barcelona, Catalunya, Spain

Corresponding Author:

Timothy Hellwig, Department of Political Science, Indiana University,

1100 E. Seventh St, Bloomington, IN, USA.

Email: thellwig@indiana.edu