Wednesday, November 14, 2012

Republicans may be many things, but we are not moochers

A bizarre meme is spreading among the left that Republican voters disproportionally life off welfare. I guess the psychological appeal of this myth is that it makes Republicans out to be both losers and hypocrites at the same time. As a bonus, the myth allows Democrats to demand more tax payers dollars for themselves without feeling guilty about it. 

Perhaps this notion appears plausible because of geographic voting patters. Poor states vote for Republicans while rich states vote Democrats. We know however from Gelman's Paradox that this is misleading. States don’t vote, individuals do. Though poorer states vote Republican, within states the pattern is the opposite: poorer individuals vote Democrat. It is low-income Democrat voters who are dragging down the Red State average, while high-income Republicans in Blue States raise their average.

For example look at the CBS-News exit poll by family income:



President Obama won voters earning less than 30k by 63-35 percent, while Romney won voters earning more than 250k by 55-42 percent. Romney won every income group making more than 50 000 dollars. If you are a Democrat residing in the “reality based community”, which of these two groups do you think is more likely to receive welfare? Doesn't it require an extra dose of double-think to hate Republicans simultaneous for being welfare-cases and greedy rich one percenters?

Another question asked "Do you work full time?" Obama won the group saying “no” 53-45 percent, while tying full-time workers 49-49 percent.




Reuters exit polls have some additional data on voting patterns by work-status. Obama won the “Currently Unemployed” by 58-40 percent. Among the group that doesn’t work, Romney won the retired by a 57-43 margin.
 

David Frum meanwhile misleadingly tries to portray Republicans as moochers using various tricks, writing: “The federal government spends seven times as much money on people over 65 as it does on people under 19. The Republican base are the people who get the most from the federal government…You can’t think if you reject facts.”

First: Working your whole life and paying taxes and then receiving some of those taxes back when you are retired is not the same thing as working age adults not working and living off taxpayers.
 

Also note the subtle dishonesty of talking about how much people under 19 get from “federal” government. In the United States education is mostly paid for by local government while pensions are mostly federally funded . If you want to discuss redistribution, what services that are divided between federal and local levels of government is irrelevant. Here is government expenditure by function in 2011:

Retirement: $600 billion
Medicare: $500 billion
Education: $800 billion
Income Security (welfare, unemployment etc.): $700 billion

So much for the
insincere impression David Frum tried to convey that the old get 7 times more money than the young. Economists belive that comparing people across different stages in their life-cycle is not fundamental for understanding welfare-state redistribution and voting patterns. The reason is obviously that over your life those patterns even out. Everyone is young at some point and most people live to be old. As Karl Marx could have explained to David Frum, the fundamental redistributive class-struggle in society is between the rich and the poor, not between individuals at various stages of their life-cycle. You can’t think if you reject the facts David.

The CBO has an interesting report which shows how much federal taxes households with different income on average pay and how much they receive back in the form of transfers. The data is for the year of 2009 and includes payroll taxes. The report doesn't include local taxes (which are roughly proportional to federal taxes), and more importantly doesn’t report the value of government services such as education and healthcare. It therefore likely underestimates how much the poor get in total. Nevertheless the results are illustrative.
The income groups are not identical to exit polls, but fairly close, and sufficient for a rough comparison.  

Households making less than around 30k received $890 billion more in transfers than they paid in in taxes. Voters earning less than 30k voted for Obama with a 63-35 percent margin.

Households making between 30k-50k paid in $60 billion less in federal taxes than they received in transfers. Obama won this range by a 57-42 percent margin.

Households making 50k-100k paid in +$410 billion more than they received. Romney won voters making this range by a 52-46 percent margin.

Households making between 100k-350k paid in +$480 billion in taxes than they received in transfers. Here the voting categories don’t correspond as well, but Romney won voters making between 100k-250k by a 54-44 percent margin.

Households in the infamous one percent, making more than 350k, paid in +$390 billion more in taxes than they got in transfers. Again the categories do not perfectly align, but Romney won voters making more than 250k by a 55-42 percent margin.

It would be great if an economist calculated exactly how much Republican and Democrat voters pay in in taxes and receive from the government. Until someone does, we can make a best-guess estimate. Looking at the distribution of income as a reasonable proxy, we find that Republicans earn more than Democrats and that high-income earners pay in more net than low-income earners (which is the whole point of a welfare state). The welfare state that the Democratic party has constructed is designed to redistribute from high income earners who generally lean right to lower income earners who
generally lean left. This is not surprising, but rather the classical pattern we observe in developed countries.

8 comments:

  1. You seem to make the same mistake that you're trying to call out. Just as claiming that a state voting red, and a state getting more federal aid does not mean that all republicans receive federal aid...
    Neither does a correlation between a nation-wide income-voting and an individually-narrow federal aid mean that all people do a thing.

    Not every republican, nor every person making under $50k receives more government aid than they pay in taxes. Calling either one single demographic is a very serious mistake. There are many different reasons to be a Republican. The two main tenets are Fiscal Conservative, and the Social Conservative... someone who votes Red may be strongly one or the other, or a mix between the two. In my own experience, republicans who are only fiscal conservatives are much more likely to be 'high earners' than someone who is a social conservative.

    A study at an individual level would actually let us see what is the real cause. I believe that what we'll find is that it isn't democrats or republicans that are relying on federal aid, but rather rural areas are relying on urban areas. This map of Washington State was created to show the red/blue divide, but I think that what it really shows is the urban/rural divide.
    http://www.thestranger.com/binary/ea57/CityLead-CLICK.jpg

    When it comes to large groups of people, I don't think it matters if they're republican or democrat... large cities can create a great amount of wealth, and they can support their poor with better "economy of scale" than smaller cities, and MUCH better than towns.

    This may give an indication as to why 'urban' areas are much more likely to lean left... the cost of "Income Redistribution" is not nearly as much as it is for rural areas. It's also much more important to individuals to attempt to raise up the poor, as anger in the lower class can lead to a much higher crime rate.

    What really needs to stop happening is this stupid stereo-typing of individuals based on the way they vote. I know millionaires and homeless who voted for both Romney and Obama.

    ReplyDelete
    Replies
    1. nobody is stereotyping. 45% of the rich vote democratic. 35% of the poor vote republican. this all propensity to vote for one or the other party.

      I am a fan of Deidre McCloskey who views the economic development based on attitudes toward burgeois values. This what has made the West rich and succesfull. As in Europe we come to a point when a society becoming too rich is getting careless. the socialsit utopia has its attraction. but it brings the class warfare mentality. this is fundamentally antithetic to "burgeois values". America is a long way from France or Sweden but it is also more culturally diverse and with higher minority culture predominance. we can go down from the summit pretty quick...

      Delete
  2. I have already looked at individual level data, using the Maxim poll

    http://super-economy.blogspot.com/2012/02/do-welfare-recipients-mostly-vote.html

    ReplyDelete
  3. Receipt of government largesse is largely independent of income. Every American gets about $30,000 a year of value from government services -- a little more for the wealthy, a little more for the wealthy, and the middle class least of all.

    Welfare supporters will of course vote Democratic because Republicans have promised to take their $30k and put it in the pockets of the wealthiest. Wealthy people vote Republican because Democrats have promised to take some of their $30k and put it in the pockets of the poor.

    ReplyDelete
    Replies
    1. That was meant to say "a little more for the wealthy, a little less for the poor"

      Delete
  4. "Receipt of government largesse is largely independent of income."

    As the CBO data cited above shows, that statement is incorrect. The poor get substantially more transfers than the rich. The poor also get more services, such as medicaid, housing etc. More importantly the rich pay taxes which more than offsets what they receive (someone is paying for the rest).

    ReplyDelete
  5. A most excellent dismantlement of this this idiotic leftist meme. I have been searching for such a comprehensive explanation for years, ever since that stupid 'study' came out suggesting a correlation between voting republican and receiving federal largess.

    I suspected an ecological inference fallacy (I didn't even know what that was until I set out researching this), and you have confirmed it with your presentation of the data.

    Thank you!

    ReplyDelete

Google Analytics Alternative