The social maximum: American attitudes toward extremely high incomes

In light of the dramatic rise in income inequality at the top of the income distribution, this study investigates how the American public is reacting to extremely high incomes. Tolerance for high incomes is measured using survey items about a cap on compensation. The paper aims to answer the following questions: What do people think about compensation caps? What are the determinants of favoring a cap and favoring various levels of caps? Do characteristics of high earners affect these preferences? Why do people favor or oppose a cap on compensation? Analyses show that 61% of Americans support a cap on compensation and that this support for a cap is remarkably stable even when high earners are described as being exceptionally productive or hard-working. Common reasons for favoring a cap include a concern about scarcity of resources, a belief that high incomes are disproportionate to contribution, a commitment to equality and the belief that the legitimate needs of high earners are sated. Common reasons for opposing a cap include seeing the idea of a cap as conflicting with a free market system, a belief that high earners deserve their incomes, and a concern that a cap is a restriction on individual freedom. It is suggested that these attitudes should not be understood as arising mainly or only due to the economic recession. The findings show some support for the proposition that economic individualism, which inoculates modestly high incomes from criticism, may be weakened at the extreme.

► Sixty-one percent of Americans favor a cap indicating low tolerance for high incomes.
► Support for a cap is stable even for exceptionally meritorious high earners.
► Top reason for favoring a cap is a concern about scarcity and lower earners.
► Top reason for opposing a cap is that it is against the principles of a free market.
► The results observed here are not solely or mainly a reaction to the recession.