Inequality and U.S. Public Opinion on Foreign Aid

Abstract

Spanish

Chinese

I investigate how the level of inequality affects American public opinion on foreign aid. As the level of inequality increases across the United States, the majority of the public will be more likely to demand the government implement policies that should ameliorate severe inequality in society. Assuming that government resources are limited, a greater level of inequality in American society may weaken public support for foreign aid because the public may prioritize providing social safety nets and welfare programs in domestic milieu over granting foreign aid to developing countries. In addition, as inequality widens, the public may perceive economic globalization as one of the main causes of inequality; thus, their overall support for globalization will decline. As a result, American support for global engagement will be negatively affected, and public support for foreign aid may decrease. An empirical test using public opinion data in 50 U.S. states since the 1980s confirms my theory: widening inequality both across states and within a given state does weaken public support for U.S. foreign aid.

Keywords

Inequality Public Opinion Foreign Aid United States Globalization Welfare

Inequality in American society has widened over the last couple of decades. For example, the Gini coefficient for income increased from 0.41 in 1979 to 0.52 in 2015 (Congressional Budget Office 2018). Scholars have drawn attention to the political implications of this growing economic inequality in domestic society, such as a lower level of political participation (Solt 2008, 2010) and a greater likelihood of regime change (Boix 2003). Other researchers have emphasized how special interest groups influence government policies more effectively than average citizens do with respect to wealth redistribution–related public policies (Gilens and Page 2014).

While a good number of scholars have investigated how widening inequality influences people’s perception of the level of inequality and public opinion on domestic policies, relatively less attention has been paid to inequality’s impact on people’s opinion of foreign policies. In this article, I examine how widening inequality in the United States could negatively affect public support for foreign aid. As the level of inequality across American society increases, the public will be more likely to put more emphasis on the federal government’s responses to inequity such as expanding social safety net programs.

Assuming that the capacity of government expenditures is limited, the public will be more likely to prioritize expanding domestic social programs over granting foreign aid to less developed parts of the world. Even though the U.S. foreign aid budget amounts to only around 1.2 percent of the federal budget and to around 0.15 percent of the gross domestic product (GDP), the public may not know that such aid comprises these actual small portions. For example, a study indicates that the American public overestimates the share of federal budget for foreign aid: the average answer was foreign aid constitutes 26 percent of the federal budget.¹ This misunderstanding of the facts concerning foreign aid may render the American public less generous in granting foreign assistance as inequality perceptibly increases in society.

Another factor that may weaken public support for foreign aid are the stagnated or negative economic gains low-skilled workers experienced in advanced economies (including the United States) in recent decades (Bernard, Jensen, and Schott 2006; Ebenstein et al. 2014). Deepening economic globalization creates both winners and losers, and, as low-skilled workers in the United States identify themselves as the losing side of globalization processes, overall public support for internationalization of the U.S. economy will decline. Even though scholars have suggested that more direct causes of stagnated income for low-skilled workers are technological changes and a widening compensation gap across education levels, some politicians and mass media focus specifically on international trade as the main cause of declining manufacturing or other low-skilled jobs. In this political environment, low-skilled workers may be more likely to perceive economic globalization negatively. A lower level of support for globalization among low-skilled workers should weaken overall public support for foreign aid because people recognize granting foreign development assistance as one of the main types of global engagement by the U.S. government.

This article is structured as follows. In the next section, after discussing the existing literature on public opinions on inequality, globalization, and foreign aid, I explain why and how widening inequality in the United States should influence public support for foreign aid. In subsequent sections, I empirically test my theory and hypothesis and discuss the political implications of my test results.

Literature Review

To understand public attitudes toward foreign aid in this era of economic globalization and widening inequality, it is useful to review the existing literature specifically concerning the factors affecting public opinions on inequality, globalization, and foreign assistance. Below, I first discuss the literature on public opinions on foreign aid and inequality followed by a review of the literature on public perceptions of the relationship between inequality and globalization.

Public Opinion on Foreign Aid

While researchers have noted that relatively little research has been conducted on public opinions regarding foreign aid either in donor or recipient countries (Milner 2006; Paxton and Knack 2012; Stern 1998), Stern (1998) found that countries with a greater level of public support for foreign aid tend to donate more foreign assistance. Acknowledging that elites have more influence on foreign policy decision-making processes (Krasner 1978; Waltz 1979), public opinions on foreign aid are also mainly driven by elites’ policy initiatives (Berinsky 2007). Still, the level of public support for foreign assistance is an outcome of the interaction between elites and the masses because public opinions can still constrain political leaders together with social and economic elites in their foreign policy formation processes (Canes-Wrone, Brady, and Cogan 2002).

A group of scholars have reported that foreign aid is relatively less popular in the United States compared with European countries (Paxton and Knack 2012; Stern 1998) possibly because Europeans’ perception of and confidence in the role of the government as actively engaging in social issues may result in a higher level of public support for foreign aid (Diven and Constantelos 2009). Public attitudes on foreign aid are also influenced by political partisanship: support is lower among conservative party supporters than it is for liberal party supporters (Noël and Thérien 2008; Thérien and Noël 2000; Tingley 2010) in the Development Assistance Committee (DAC) member countries in the Organisation for Economic Co-operation and Development (OECD).

Another variable related to overall public opinion on foreign aid is the level of education and skills among individuals: workers with a high level of human capital are more likely to support foreign aid than those with a low level of education and skills (Milner and Tingley 2013). This result is similar to the reports from the literature on the relationship between individual workers’ education (and skill) levels and their support for globalization (Edwards 2006; Finseraas, Pedersen, and Bay 2016; Hainmueller and Hiscox 2006; Hoffman 2009; Mayda and Rodrik 2005; Scheve and Slaughter 2001).

Inequality and Public Response

Researchers have investigated the various political impacts on a society caused by widening inequality. One widely discussed topic concerns how inequality should influence political participation of the masses. A group of researchers have argued that as the public recognizes widening inequality, the masses are more likely to demand redistributive government policies (Andersen and Curtis 2015; Finseraas 2009) or to expect the government to be supportive of strengthening the political and economic representation of labor unions (Newman and Kane 2017). A caveat is that economic elites still should be able to slow the pace of implementation of reformist and redistributive policies (Erikson 2015). As a result, the positive relationship between inequality and support for redistribution by the masses is actually small (Johnston and Newman 2016).

In contrast, other scholars have found that increasing inequality actually promoted a more conservative response among voters in the United States (Kelly and Enns 2010; Luttig 2013). In a similar vein, American states with a higher level of inequality tend to provide a lower level of welfare benefits (Scruggs and Hayes 2017). The lack (or shortage) of redistribution policies is potentially due to a stronger political influence by the wealthy (compared with that of the poor) after inequality is widened (Solt, Habel, and Grant 2011). The masses may not be able to pressure the government into implementing redistributive policies because citizens in the lower social and economic strata have a weaker political representation in the policy-making processes than wealthier citizens do (Flavin 2012), especially so in the area of national security and economic policies (Gilens 2012). By contrast, affluent citizens should be able to represent their interests directly in policy-making processes by utilizing available monetary resources to persuade legislative members and bureaucrats through campaign contributions or lobbying (Bonica et al. 2013; Erikson 2015). More broadly, Page and Jacobs (2009) argued that the lack of a class war in the United States results from American society’s widespread rejection of perceptions of growing disparities in income and wealth. As a result, usual policy outcomes strongly represent the most affluent citizens and economic elites’ preferences at the expense of low- or middle-income earners’ preferences (Gilens 2005; Gilens and Page 2014).

Another potential explanation as to why the masses do not strongly demand redistribution by the government is the public’s underestimation of the size of the inequalities in American society (Osberg and Smeeding 2006), even though the United States has a greater amount of inequality compared with other developed societies (Smeeding 2005). The public may not be able to mobilize their political efforts due to the mass media’s emphasis on the merits and success of individualism as well as political and economic elites’ efforts to misinform the poor about the existence of extreme inequality in the United States (Jacobs and Shapiro 2000; Kelly and Enns 2010). The public, unaware of widening inequality, is much less likely to pressure the government to provide solutions that alleviate inequality (Franko 2017). Related to the lower class’ underrepresentation issue, Solt (2011) suggested that political leaders have an incentive to mobilize diversionary nationalism and national pride to dampen the masses’ recognition of economic inequality and their demand for redistributive policies.

Globalization and Inequality

Public opinions on economic globalization may vary because the globalized economy generates benefits and costs for different groups of people (Dunning 1995). While economic gains should be one main factor that influences public opinion on globalization, social values and political ideologies can also explain public attitudes toward globalization (Wolfe and Mendelsohn 2005).

Existing literature indicates dissimilar views on how economic globalization would affect inequality. Some scholars have posited that economic openness (and specifically financial market liberalization) by a given country is more likely to lead to growth in its standard of living and its citizens’ personal income, which should ultimately reduce income inequality across the society (Dong 2014; Johansson and Wang 2014). In a similar vein, deeper financial market liberalization has been associated with a higher level of efficiency in the banking sector, which tends to lower income inequality over the long term (Burmann and Lensink 2016). Similarly, financial market reforms such as removal of regulations have been associated with a lower level of income inequality (Agnello, Mallick, and Sousa 2012). Related to the financial market liberalization, some have found that a greater level of stock market liquidity² of an economy is associated with a lower level of income inequality and poverty rates, even though the impact is significant only in developing countries (Blau 2018; Levine and Zervos 1998).

By contrast, financial market openness has been reported to be more likely to increase a given economy’s vulnerability to shocks from the global economy and thus increase income inequality (de Haan and Sturm 2017). This finding contrasts with that of Burmann and Lensink (2016). According to de Haan and Sturm (2017), institutional quality, in addition to financial development and financial liberalization, may have an impact on income inequality. In a similar vein, weak financial institutions give the rich privileges, such as access to additional finance, while the poor are more likely to be denied (Rajan and Zingales 2003). Where strong financial institutions are present, however, financial development may reduce income inequality by allowing opportunities for the poor to invest in human and physical capital (Law, Tan, and Azman-Saini 2014).

As negative impacts from economic globalization increase, the public should strengthen their demand for protection from more volatile globalized markets (Rodrik 1998). Even though the public hopes that policy makers will adopt redistributive policies to compensate for economically poor performers negatively affected by economic globalization (Iversen 2005; Swank 2002), national governments’ room to maneuver in policy-making processes may be constrained under the highly integrated world economy (Christensen 2001). Still, other researchers have found that citizens in states with a higher level of economic globalization (measured by the level of trade exposure) are more likely to pressure state governments to implement compensating public policies (Anderson, Krueger, and Xu 2016). Similarly, Hellwig (2014) argued that the public tends to pressure national governments to increase health care or pension programs, even though voters also assume that their governments are less able to successfully fix negative economic outcomes (e.g., inequality) in this highly globalized economy.

Theory and Hypotheses

Existing literature indicates that national security considerations (Mearsheimer 2001) and economic interests (Dreher et al. 2018) primarily drive the foreign aid policies of donor countries. Other scholars have found that human rights protection records by recipient countries may affect donor countries’ allocation of foreign assistance (Heinrich, Kobayashi, and Long 2018). Recently, researchers have reported that donor countries increasingly consider donating foreign aid as a way to minimize negative spillover flows into donor countries, such as illegal immigration or drug supplies, especially in recent decades (Bermeo 2017; Gamso and Yuldashev 2018).

While political leaders have more room in foreign policy decision-making processes (e.g., diversionary war theory) than the masses do, public opinions still matter in a democracy (e.g., domestic audience costs arguments) because political leaders in democratic regimes have limited tenures determined by regular elections. In addition, public opinions require attention because they provide legitimacy in foreign policy-making processes in democracies. In this study, I argue that public opinion on foreign aid should be influenced by the level of inequality across 50 states in the United States. Acknowledging that existing literature mainly covers inequality’s impact on public opinion of domestic policy, my focus on inequality’s influence on foreign aid policy should complement our understanding of the political implications of widening inequality.

As the masses perceive widening inequality in the United States and identify themselves as the losing side, they hope the federal, state, and local governments will address the inequality issue. When the public wants the various levels of governments to strengthen domestic social welfare programs to moderate inequality, they also understand the fact that the extent of government expenditures is limited. Even though the majority of state governments could have had a fiscal surplus in recent years, budget deficits have widened in recent decades at the federal level. Acknowledging the increasing budget deficits of the federal government, the public may prioritize the government’s public expenditures directly related to social safety nets and welfare programs over other expenditures. In this limited expenditure situation, the masses will be less likely to emphasize foreign aid programs and be more likely to have neutral or even negative views on the federal government’s foreign aid expenditures.

Another causal relationship between widening inequality and public opinion on foreign aid may relate to people’s perception on the cause of inequality. Even though scholars have found that the main causes of inequality include (1) technological advancement in the manufacturing and service sectors such as automation, (2) a stagnated minimum wage, and (3) a widening compensation gap by level of educational achievement, populist politicians and some of the mass media emphasize economic globalization processes as the major factor responsible for inequality. As the public increasingly (over the last couple of decades) believes that economic globalization causes inequality, the masses will be more likely to have a negative view toward globalization processes. The masses’ less favorable attitudes toward globalization should reduce the amount of positive public opinion on American engagement with the rest of the world. One main method used in U.S. foreign policy to promote its global engagement is granting foreign aid to less developed societies, and as a result of a decrease in public support for foreign aid, such aid will be more likely to decrease. In sum, as the public increasingly assumes that economic globalization results in inequality in American society, citizens will be more likely to have negative views on the U.S. government’s global engagement programs such as official development assistance (ODA). Acknowledging various levels of inequality across 50 American states, I believe that a given state with a greater level of inequality should have a lower level of public support for foreign aid. In addition, a greater level of inequality within a given state across multiple time-periods should have a negative impact on that state’s public support for foreign aid. The aforementioned negative impacts from widening inequality on public opinion about foreign aid lead to my first hypothesis:

Hypothesis 1: As income inequality widens in a given American state, the state’s public support for granting foreign aid will be more likely to decline, all other things being equal.

Table 1 displays the causal relationship of the hypothesis. In the next section, I provide an empirical test of this hypothesis.

Table 1.

Hypothesized Changes in Public Opinions as a Consequence of Widening Inequality.

	Priority of domestic expenditure over foreign aid	Perception of globalization as cause of inequality
Foreign aid	Negative	Negative

Testing the Hypothesis

I test my hypothesis using U.S. public opinion data on foreign aid as the dependent variable and income inequality data measured by the Gini coefficient as the main independent variable. Both data cover 50 states and the District of Columbia between 1973 and 2012, and the unit of analysis is an individual state in a given year.

I employ six statistical models to analyze my cross-sectional time series (CSTS) data with 50 states in 40 years. The first one is a generalized least squares (GLS) model with random effects that estimates the variation in impacts from inequality across 50 states. To assess the level of fully maximized likelihood, I adopt an additional random effects model: maximum likelihood estimation (MLE). Next, I include a state fixed effects model to examine the impacts of changing levels of inequality in a given state across multiple time-periods. To determine the population average effect of independent variables, I create a generalized estimating equations (GEE) model as well. Even though ordinary least squares (OLS) with panel-corrected standard errors (PCSE) model is considered more useful for data with a larger number of time variances with a smaller number of units, I still employ an OLS model with PCSE estimation for a robustness test. Error processes may not be independent of each other in a panel dataset with time variances (Beck and Katz 1995). For another robustness check, I adopt a generalized method of moments (GMM) estimation that includes a lagged dependent variable as one of the covariates (Arellano and Bond 1991). In addition to the aforementioned six estimations, each model is estimated with one-period-lagged independent variables that should allow more time for them to have an effect on the dependent variable.

Measurement and Variables

The dependent variable of my hypotheses, public opinion on foreign aid, is adopted from the General Social Survey (GSS) data by the National Opinion Research Center at the University of Chicago. The original public opinion data from the GSS cover nationally representative observations, and Kim and Urpelainen (2017) used multilevel regression and postratification (MRP) techniques to estimate state-level opinion. Specifically, the variable represents the estimated proportion of respondents in each state who believe that the U.S. government is spending “too little” on foreign aid.³

The main explanatory variable (i.e., the level of income inequality) of my hypothesis is measured by the Gini coefficients constructed by Frank (2014) who used individual tax filing data available from the Internal Revenue Service (IRS). A Gini coefficient of “0” means that every individual in a society has exactly the same income (i.e., perfect equality). In contrast, the Gini coefficient of “1” indicates that one individual has all income of the society and the rest have none (i.e., maximum inequality).

I also included a group of control variables usually believed to influence public opinions in a given state. The first one is a measure of citizen ideology (i.e., conservative or liberal). Acknowledging that state-level public sentiment regarding political ideology is relatively stable over time (Monogan 2013), I predict that a given state with a liberal political ideology among citizens will be more likely to have a more positive public opinion regarding foreign aid. I employ the portion of state residents with a high school diploma as another control variable. A higher level of education among residents will be more likely to be associated with public support for global engagement.

Next, existing literature has indicated that the masses’ public policy preferences are a function of economic conditions (Alvarez and Butterfield 2000; Hopkins 2010; Stevenson 2001; Wilkes and Corrigall-Brown 2011); thus, my empirical models include four measures of economic indicators for each state: average per capita income, poverty rate, unemployment rate, and consumer price index (i.e., inflation rate). I predict that the masses in a given state with a higher level of personal income and a higher inflation rate will be more likely to support granting foreign aid because each of these factors represents overall state-level economic well-being and an indirect sign of an expanding economy, respectively. By contrast, the public living in a state with higher levels of poverty or unemployment rate should be less likely to be positive toward foreign aid. The last control variable I employ is labor union density. Assuming that organized labor is more likely to demand the federal government to increase domestic expenditures (for stimulating the national economy), I predict that a given state with a higher portion of unionized employees should tend to be less positive regarding foreign aid. Tables 2 and 3 show the basic statistics for each variable and the correlation matrix between variables, respectively. The appendix provides the data sources for the variables employed.

Table 2.

Descriptive Statistics.

Variable	Observation	M	SD	Minimum	Maximum
Public support for foreign aid	2,000	0.1090679	0.1154757	0.0170497	0.5766323
Gini coefficient	2,040	0.5486315	0.0549855	0.428772	0.7114252
Political ideology	2,000	48.56161	15.80735	7.48962	95.9717
High school completion	1,612	77.71476	9.334161	0	91.8
Average individual income	1,938	20,805.56	11,432.15	3,597	70,653
Poverty rate	1,683	13.12246	3.922811	2.9	27.2
Unemployment rate	1,683	0.0303195	0.0097861	0.0116825	0.0724785
Consumer price index	1,900	0.6444944	0.2606105	0.178384	1.42319
Labor union density	1,900	15.42247	7.47037	2.3	40.1

Table 3.

Correlations Coefficients.

	Public support for foreign aid	Gini coefficient	Political ideology	High school completion	Average individual income	Poverty rate	Unemployment rate	Consumer price index	Labor union density
Public support for foreign aid	1
Gini coefficient	.3899	1
Political ideology	.1506	−.0218	1
High school completion	.3733	.2926	.1432	1
Average individual income	.6137	.6680	.2509	.5736	1
Poverty rate	−.0989	−.0262	−.3035	−.6362	−.4266	1
Unemployment rate	−.1873	−.3923	−.0283	−.3203	−.4746	.4341	1
Consumer price index	.6082	.6465	.3194	.5665	.9581	−.412	−.4922	1
Labor union density	−.1696	−.3666	.4595	.0446	−.1772	−.2183	.3849	−.1676	1

Empirical Findings

Tables 4 and 5 show the regression results of the analysis of public opinion on foreign aid. The results of the six regression models of the influence of positive opinions on foreign assistance are shown in Table 4, and the same models with one time-period lagged independent variables are presented in Table 5. Models I and VII are GLE estimation with random effects, and Models II and VIII represent fixed effects models. Models III and IX are my maximum likelihood estimation estimations, and Models IV and X represent the GEE population average model. Finally, Models V and XI are the OLS models with PCSE estimation, and Models VI and XII present the Arellano–Bond dynamic panel data estimation.

Table 4.

Regression Models of Public Opinions on Foreign Aid.

	Model I	Model II	Model III	Model IV	Model V	Model VI
Lagged dependent variable						1.135*** (0.017)
Gini coefficient	−0.299*** (0.057)	−0.169** (0.076)	−0.299*** (0.057)	−0.317*** (0.052)	−0.299(0.199)	−0.173*** (0.045)
Political ideology^a	0.294** (0.145)	1.668*** (0.25)	0.294** (0.144)	0.181(0.123)	0.294(0.335)	0.527*** (0.155)
High school completion^a	2.617** (0.374)	5.987*** (0.596)	2.617*** (0.373)	2.116*** (0.325)	2.617* (1.337)	1.159*** (0.332)
Average individual income^b	5.23*** (0.744)	−0.938(1.37)	5.23*** (0.741)	5.42*** (0.631)	5.23*** (1.63)	0.208(0.906)
Poverty rate^a	6.345*** (0.684)	3.64*** (0.982)	6.346*** (0.682)	6.175*** (0.613)	6.346*** (1.624)	1.01* (0.571)
Unemployment rate	0.744*** (0.262)	0.395(0.302)	0.745*** (0.261)	0.727*** (0.244)	0.744(0.869)	0.572*** (0.178)
Consumer price index	0.099*** (0.035)	0.402*** (0.064)	0.099*** (0.035)	0.098*** (0.03)	0.099(0.082)	0.123*** (0.043)
Labor union density^a	−1.177*** (0.345)	6.758*** (0.932)	−1.177*** (0.344)	−1.198*** (0.289)	−1.118(0.74)	1.648*** (0.594)
Observation	1,350	1,350	1,350	1,350	1,350	1,300
R ²	.453	.188			.453

Note. Standard errors in parentheses.

Coefficients have been multiplied by 10³.

Coefficients have been multiplied by 10⁶.

Significant at 10%. **Significant at 5%. ***Significant at 1%.

Table 5.

Regression Models of Public Opinions on Foreign Aid.

	Model VII	Model VIII	Model IX	Model X	Model XI	Model XII
Lagged dependent variable						1.065*** (0.013)
Lagged Gini coefficient	−0.462*** (0.068)	−0.318*** (0.089)	−0.347*** (0.087)	−0.347*** (0.086)	−0.462** (0.232)	−0.1707*** (0.044)
Lagged political ideology^a	0.233(0.172)	1.864*** (0.292)	1.186*** (0.314)	1.185*** (0.27)	0.233(0.393)	0.177(0.152)
Lagged high school completion^a	4.013*** (0.443)	8.731*** (0.695)	7.941*** (0.729)	7.941*** (0.662)	4.014** (1.577)	2.135*** (0.323)
Lagged average individual income^b	6.63*** (0.882)	−8.14(1.59)	1.89(1.66)	1.89(1.48)	6.63*** (1.9)	0.132(0.879)
Lagged poverty rate^a	8.421*** (0.811)	4.11*** (1.146)	6.033*** (1.204)	6.033*** (1.096)	8.421*** (1.902)	−0.358(0.554)
Lagged unemployment rate	1.484*** (0.311)	1.296*** (0.352)	1.431*** (0.351)	1.43*** (0.349)	1.484(1.015)	1.27*** (0.172)
Lagged consumer price index	0.177*** (0.042)	0.529*** (0.075)	0.357*** (0.081)	0.357*** (0.069)	0.177* (0.096)	0.128*** (0.042)
Lagged labor union density^a	−1.934*** (0.409)	7.228*** (1.087)	2.049(1.449)	2.048** (0.863)	−1.933** (0.867)	0.306(0.578)
Observation	1,350	1,350	1,350	1,350	1,350	1,300
R ²	.537	.255			.537

Note. Standard errors in parentheses.

Coefficients have been multiplied by 10³.

Coefficients have been multiplied by 10⁶.

Significant at 10%. **Significant at 5%. ***Significant at 1%.

The main explanatory variable, the level of inequality measured by the Gini coefficient, turns out to reduce public support for granting foreign aid as shown in almost all estimations using either 99 percent or 95 percent significance levels. These results strongly support my hypothesis: widening inequality weakens public support for foreign aid. The strong and consistent regression results across various estimation methods confirm that the public in a given state with a greater level of income inequality will be less likely to be positive about foreign aid compared with the public in other states with relatively lower levels of income inequality. The negative effect from inequality on public opinion about foreign aid is also seen in fixed effects Models II and VIII. The statistically significant results in the fixed effects model show that widening inequality across multiple time-periods within a given state has a negative impact on that state’s public opinion of foreign aid. In short, the negative effect is empirically confirmed not only across states but also across time within a state. A caveat is that the association between the inequality variable and the dependent variable is not statistically significant in Model V (OLS and PCSE estimation). However, as the PCSE estimation approach is more relevant to panel data that have a larger number of time variances than the number of sections, I believe the result does not necessarily cause problems for my hypothesis. In sum, regression results from a majority of estimation methods clearly show that widening inequality does decrease public support for providing foreign assistance to the rest of the world. The negative impact was confirmed empirically in 50 states in recent decades.

Regarding the control variables, a state with a liberal political ideology turns out to increase its support for granting foreign aid, as predicted. The proportion of high school–educated population in a given state was positively correlated with positive opinions on foreign aid. State residents with a higher average income tend to be supportive of foreign aid. However, positive impact is not always shown across all estimations, and thus, the income effect is only partially confirmed. A state experiencing consumer price increases, which may imply a growing economy, tends to support foreign aid.

The unionization level among workers shows mixed results. While half of the estimations show a state where more employees are unionized tends to be less sympathetic toward granting foreign aid, as predicted, the other regression models’ results indicate that the association can be actually positive. As a greater level of unionization should indicate an increased political influence by the working class, who would prefer domestic welfare policies over foreign assistance programs, the negative association is not a surprise. At the same time, more unionization of the working class usually leads to a higher level of compensation and benefits, and as workers receive a sustainable income, they might become more generous toward granting foreign aid, in a manner similar to the positive individual income effect discussed above. In addition, American unionized workers may support granting foreign aid to developing countries because they may understand that foreign aid can help recipient countries’ economic growth and income, which should narrow wage gaps between American workers and those in recipient countries. A reduced wage gap should improve the price competitiveness of domestically produced goods in the United States and global markets.

The remaining two control variables, poverty rate and unemployment rate, turn out to have a positive impact on public opinion regarding foreign aid, which is opposite to my predictions. In a simple correlation test, however, the two variables have a negative association with the dependent variable. The regression results of poverty and unemployment rates imply that more research should be conducted to investigate and clarify the relationship between the two economic indicators and foreign aid opinions.

To estimate the consequences of changes in the values of my regressors on public opinion concerning foreign aid more precisely, I calculated the size of marginal effects. Table 6 presents point estimates of the simulated changes in public opinions when a regressor is set one standard deviation below or above its mean. The results confirm the overall regression results discussed previously. First, a one standard deviation increase in income inequality was associated with a stimulated change of –.0165 (a one standard deviation decrease resulted in a change of .0165). These results suggest that a one standard deviation increase in the Gini coefficient would lead to approximately 1.65 percent less positive sentiment regarding granting foreign aid, and a one standard deviation decrease would result in 1.65 percent increase in positive opinions. In additional tests with the other two control variables, liberal political ideology among citizens and the proportion of individuals with a high school diploma, I found 0.46 percent increase and 2.45 percent increase (respectively) in positive sentiment on foreign aid when each variable’s value had a one standard deviation increase.

Table 6.

Simulated Changes in Point Estimates of Public Opinion on Foreign Aid for One Standard Deviation Change in Selected Regressors.

Regressor	Simulated changes in positive opinion when regressor is one standard deviation below its mean	Simulated changes in positive opinion when regressor is one standard deviation above its mean
Income inequality	.0165	−.0165
Political ideology	−.0046	.0046
High school education	−.0244	.0245

Note. The basis for these simulations is Model I in Table 4.

Conclusion

My review of the literature suggested that widening economic inequality should have an impact on public opinions regarding the roles of the federal government. Assuming that the public’s demand to address domestic inequality issues could be directly related to allocating the limited amount of federal expenditures, I examined how inequality in American society would affect public opinions on granting foreign assistance to the developing world.

While the portion of foreign aid in the federal government expenditure has remained around 1 percent of total federal spending, the masses may still be less likely to be positive on foreign aid programs when the public notices a widening inequality in American society, particularly in recent decades. The public may want the federal government to prioritize addressing the inequality issue by expanding redistributive policies domestically instead of providing assistance to other countries. The masses may have a negative perception of overall American engagement with the rest of the world mainly due to their incomplete or incorrect understanding of the negative impacts of economic globalization on job losses inside the U.S. economy. As a result, public support for granting foreign aid (as one main type of global engagement by the U.S. government with the rest of the world) should decrease.

Considering the masses’ demand to prioritize domestic inequality issues over international engagement by the U.S. government, I hypothesized that increasing inequality should lower public support for foreign aid. My empirical test of this hypothesis using different regression methods strongly confirmed my theory: public opinion on foreign assistance in a given state is lower if income inequality in the state is greater. A notable finding is that the negative impact from inequality on foreign aid opinion is substantial and statistically significant not only across 50 states but also within a given state. In other words, as inequality increases across multiple time-periods, positive views on foreign assistance decrease within a state.

Overall, my findings suggest that widening inequality in the United States may potentially weaken the legitimacy of American leadership in international politics should the U.S. government scale down domestically unpopular foreign assistance programs, as generous foreign aid programs should enhance the U.S. government’s global engagement level and its soft power in global governance as well. Acknowledging that the United States remains the largest donor country in the world in recent decades, a smaller foreign aid program by the United States in future would possibly mean fewer development and humanitarian assistance to the least developed parts of the world unless other major powers or donor countries increase their own foreign aid programs.

Future research may further test the theory on inequality and public sentiment on foreign aid presented here by applying the theory to other donor countries, notably the DAC member countries in the OECD.

Footnotes

Appendix

Variables and Data Sources.

Variable	Measured by	Source
Positive public opinion on foreign aid	Percentage	Kim and Urpelainen (2017)
Income inequality	Gini coefficients	Frank (n.d.)
Liberal political ideology	Percentage	Berry et al. (1998)
High school education	Percentage	Stateminder from Georgetown University. Available from http://stateminder.org/
Average personal income	U.S. dollars	U.S. Department of Commerce, Bureau of Economic Analysis.
Poverty rate	Percentage	U.S. Census Bureau, Housing and Household Economic Statistics Division.
Unemployment rate	Percentage	University of Kentucky Center for Poverty Research (2016)
Consumer price index	Rate	Klarner (2013)
Labor union density	Percentage	Kelly and Witko (2014)

ORCID iD

Hak-Seon Lee

1

See the study by the Kaiser Family Foundation at

2

Liquidity in a stock market is a measure of how quickly investors can purchase or sell corporations’ shares without causing a significant change in the price of shares.

3

See .

About the Author

Hak-Seon Lee (PhD, University of North Carolina at Chapel Hill) is an associate professor in the Department of Political Science at James Madison University in Virginia. His research focuses on how economic globalization processes have an impact on domestic politics. Specifically, he investigates political implications of foreign direct investment and multinational corporations. His previous research has been published in Foreign Policy Analysis, International Trade Journal, Journal of Transnational Management, World Affairs, and Transnational Corporations Review.

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