The Study Of Relationship Between Income Inequality And Social Trust

Income inequality is of great concern about the core of transformation in social-economic structures. Income inequality brings about declined trust which leads to various social consequences, stretching from impeding economic development to deteriorating personal health. Two competing theories about the relationship between income inequality and trust are absolute income effect and income-inequality hypothesis. The former argues that individual residents’ absolute income have real effect on social trust. Once the absolute income get controlled, the influence of income distribution vanished. The latter finds out that income gap itself has polluting effect which is independent of absolute income. That is to say, income inequality tip the balance of social trust. Therefore the first question we face is:does income inequality in china affect social trust independently?Previous studies about income-inequality hypothesis argue that there are two different mechanisms behind this relationship. One is psychosocial theory which emphasizes severe income inequality aggravated individual perceived inequality which leads to low level social trust. Through social comparison, people compare with others’ social economic status which constructs social fairness condition subjectively. The perceived inequality influenced social trust. The other is new-materialism, following resource theory, which argues that government enduring higher income inequality invests less in public expenditure. Limited resources tension interpersonal relationship which leads to low trust. The raise of available resources strengthened individuals’ abilities to undertake risks of distrust. That’s how social trust get promoted. That is another focus in this paper how income inequality affects trust level, namely which mechanism can explain it. On the basis of above views, I proposed five hypothesizes, absolute income hypothesis, income-inequality hypothesis, national wealth hypothesis, perceived inequality hypothesis and new materialism hypothesis.The data used in this research come from Chinese General Social Survey (2010) and county-level statistics, we examined this relationship. The income inequality is measured by Gini index and urban-rural proportion, perceived inequality operated by justice evaluation and self-reported income fairness, per capital fiscal expenditure to measure new materialism. Statistical methods we use here is Hierarchical Linear Modeling (HLM) and quantile regression to verify these hypothesizes.The result find that, the level of trust decrease with the expanding income inequality, which demonstrates that with family absolute income controlled the macro income inequality have negative effect on trust. However national wealth correlates negatively with trust which contrasts with those already researches. It means that national wealth can’t influence trust completely and income inequality rather than the former tips the scales. To the mechanism study we find that perceived inequality and new materialism can only illustrate the effect income inequality on trust partially. The more unfair individual perceives income distribution, the less they trust each other. And the same goes to self-reported income fairness that they come along same variation trend. But during the procedure, the role income inequality in trust variation was crippled. That why we call it limited effects. The improvement of per capital fiscal expenditure have positive effect on the raise of trust level. But it can’t decide all neither.