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Global Evidence on Misperceptions and Preferences for Redistribution

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  • Jennifer Elena Feichtmayer
  • Klaus Gründler

Abstract

Individuals often hold erroneous beliefs about their socio-economic status relative to others. We develop a new machine learning technique to measure these misperceptions and use large-scale international survey data to compute status misperception for 241,757 households from 97 countries (24 OECD, 73 non-OECD). We show that status misperception is a widespread phenomenon across the globe. Upward-biased perceptions are associated with lower preferences for redistribution and have direct consequences for welfare provision via the tax and transfer system. The effect accounts for approximately 9% of the variation in redistribution preferences, is independent of socio-demographic characteristics, robust to measurement errors in social surveys, and occurs similary when we change the underlying micro data or examine party preferences.

Suggested Citation

  • Jennifer Elena Feichtmayer & Klaus Gründler, 2021. "Global Evidence on Misperceptions and Preferences for Redistribution," CESifo Working Paper Series 9381, CESifo.
    • Handle: RePEc:ces:ceswps:_9381
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp9381.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    misperceptions; machine learning; socio-economic status; preferences; redistribution; welfare provision; taxes and transfers;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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