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Biased Perceptions of Income Inequality and Redistribution

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  • Engelhardt, Carina
  • Wagener, Andreas

Abstract

When based on perceived rather than o n objective income distributions, the Meltzer- Richards hypothesis and the POUM hypothesis work quite well empirically: there exists a positive link between perceived inequality or perceived upward mobility and the extent of redistribution in democratic regimes - though such a link does not exist when objective measures of inequality and social mobility are used. These observations highlight that political preferences and choices might depend more on perceptions than on factual data.

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Bibliographic Info

Paper provided by Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Hannover Economic Papers (HEP) with number dp-526.

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Length: 22 pages
Date of creation: Feb 2014
Date of revision:
Handle: RePEc:han:dpaper:dp-526

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Keywords: Biased Perception; Majority Voting; Redistribution;

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  1. Andreas Georgiadis & Alan Manning, 2007. "Spend it like Beckham? Inequality and redistribution in the UK, 1983-2004," LSE Research Online Documents on Economics 19697, London School of Economics and Political Science, LSE Library.
  2. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  3. Roland Benabou & Efe A. Ok, 1998. "Social Mobility and the Demand for Redistribution: The POUM Hypothesis," NBER Working Papers 6795, National Bureau of Economic Research, Inc.
  4. Christian Bjørnskov & Axel Dreher & Justina A.V. Fischer & Jan Schnellenbach, 2010. "Inequality and happiness: When perceived social mobility and economic reality do not match," CEIS Research Paper 173, Tor Vergata University, CEIS, revised 08 Nov 2010.
  5. Guillermo Cruces & Ricardo Pérez Truglia & Martín Tetaz, 2012. "Biased Perceptions of Income Distribution and Preferences for Redistribution: Evidence from a Survey Experiment," CEDLAS, Working Papers 0138, CEDLAS, Universidad Nacional de La Plata.
  6. Christian Bredemeier, 2010. "Imperfect Information and the Meltzer-Richard Hypothesis," Ruhr Economic Papers 0213, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  7. Corneo, Giacomo & Gruner, Hans Peter, 2002. "Individual preferences for political redistribution," Journal of Public Economics, Elsevier, vol. 83(1), pages 83-107, January.
  8. Romer, Thomas, 1975. "Individual welfare, majority voting, and the properties of a linear income tax," Journal of Public Economics, Elsevier, vol. 4(2), pages 163-185, February.
  9. Alesina, Alberto & La Ferrara, Eliana, 2005. "Preferences for redistribution in the land of opportunities," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 897-931, June.
  10. Allan Meltzer & Scott Richard, 1983. "Tests of a rational theory of the size of government," Public Choice, Springer, vol. 41(3), pages 403-418, January.
  11. La Ferrara, Eliana & Alesina, Alberto, 2005. "Preferences for Redistribution in the Land of Opportunities," Scholarly Articles 4552533, Harvard University Department of Economics.
  12. Borge, Lars-Erik & Rattso, J.Jorn, 2004. "Income distribution and tax structure: Empirical test of the Meltzer-Richard hypothesis," European Economic Review, Elsevier, vol. 48(4), pages 805-826, August.
  13. Milanovic, Branko, 2000. "The median-voter hypothesis, income inequality, and income redistribution: an empirical test with the required data," European Journal of Political Economy, Elsevier, vol. 16(3), pages 367-410, September.
  14. Francesco Scervini, 2012. "Empirics of the median voter: democracy, redistribution and the role of the middle class," Journal of Economic Inequality, Springer, vol. 10(4), pages 529-550, December.
  15. Gouveia, Miguel & Masia, Neal A, 1998. " Does the Median Voter Model Explain the Size of Government?: Evidence from the States," Public Choice, Springer, vol. 97(1-2), pages 159-77, October.
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  1. Biased Perceptions of Income Inequality and Redistribution
    by maximorossi in NEP-LTV blog on 2014-03-11 13:43:19

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