Electoral Systems and the Rise and Fall of the Mass Consumption Society

Abstract

While there is a large literature on how electoral institutions shape producer strategies, the other side of the market (households) has received little attention. Focusing on households, I examine how electoral rules shape the “mass consumption society”, where broad masses constantly expand their consumption into luxuries previously restricted to a few. Two margins of income inequality in society affect mass consumption: the middle/bottom income gap cannot be too small, and the top/middle gap cannot be too large. When inequality is low, the bottom margin is more binding (inequality should not be lower), so inequality-increasing majoritarian systems favor mass consumption; when inequality is high, the top margin is more binding (inequality should not be higher), so inequality-reducing PR systems favor mass consumption. Using OECD and Luxemburg Income (Wealth) Study data, I show that, as inequality rises across the OECD world, today’s mass consumption society has shifted from majoritarian to PR countries.