Wealth Inequality and Public Support for Financial Stabilization in Economic Crises

Wealth plays a crucial role in providing private insurance, investment opportunities, and social status, shaping citizens’ policy preferences. These preferences, in turn, influence government decisions to stabilize financial markets and protect private wealth during economic crises. However, such policies often reinforce wealth inequality, particularly benefiting asset-rich households. Using information treatment and conjoint survey experiments in Australia and the UK in the aftermath of the COVID-19 pandemic, we examine how citizens navigate this trade-off. We find that informing respondents about the impact of financial stabilization policies on overall wealth inequality decreases support for such policies, whereas highlighting their effects on even larger wealth disparities between ethnic groups has little effect. Furthermore, respondents are more supportive of targeted policies aimed at reducing general wealth disparities than those targeting ethnic inequality. This distinction in inequality aversion underscores a key political economy challenge in addressing wealth concentration in contemporary multiethnic societies.