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Biased Perceptions of Income Inequality and Redistribution

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  • Carina Engelhardt
  • Andreas Wagener

Abstract

When based on perceived rather than on 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.

Suggested Citation

  • Carina Engelhardt & Andreas Wagener, 2014. "Biased Perceptions of Income Inequality and Redistribution," CESifo Working Paper Series 4838, CESifo.
  • Handle: RePEc:ces:ceswps:_4838
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    References listed on IDEAS

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    1. 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.
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    7. Bjørnskov, Christian & Dreher, Axel & Fischer, Justina A.V. & Schnellenbach, Jan & Gehring, Kai, 2013. "Inequality and happiness: When perceived social mobility and economic reality do not match," Journal of Economic Behavior & Organization, Elsevier, vol. 91(C), pages 75-92.
    8. Francesco Scervini, 2012. "Empirics of the median voter: democracy, redistribution and the role of the middle class," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(4), pages 529-550, December.
    9. Cruces, Guillermo & Perez-Truglia, Ricardo & Tetaz, Martin, 2013. "Biased perceptions of income distribution and preferences for redistribution: Evidence from a survey experiment," Journal of Public Economics, Elsevier, vol. 98(C), pages 100-112.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Biased Perceptions of Income Inequality and Redistribution
      by maximorossi in NEP-LTV blog on 2014-03-11 18:43:19

    Citations

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    Cited by:

    1. Kuhn, Andreas, 2015. "The Individual Perception of Wage Inequality: A Measurement Framework and Some Empirical Evidence," IZA Discussion Papers 9579, Institute of Labor Economics (IZA).
    2. Beck Hanno & Prinz Aloys, 2014. "Willkommen in Schumpeters Hotel: Zur Dynamik der Vermögensverteilung / Welcome to Schumpeter's hotel – On the dynamics of the distribution of wealth," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 65(1), pages 263-278, January.
    3. Matthias Fatke, 2018. "Inequality Perceptions, Preferences Conducive to Redistribution, and the Conditioning Role of Social Position," Societies, MDPI, Open Access Journal, vol. 8(4), pages 1-14, October.
    4. Ivo Bischoff & Nataliya Kusa, 2015. "Policy preferences for inheritance taxation," MAGKS Papers on Economics 201531, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. Ivo Bischoff & Nataliya Kusa, 2016. "Should wealth transfers be taxed? Citizens’ view on a fundamental question," MAGKS Papers on Economics 201636, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    6. Diermeier, Matthias & Goecke, Henry & Niehues, Judith & Thomas, Tobias, 2017. "Impact of inequality-related media coverage on the concerns of the citzens," DICE Discussion Papers 258, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    7. Gründler, Klaus & Köllner, Sebastian, 2017. "Determinants of governmental redistribution: Income distribution, development levels, and the role of perceptions," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 930-962.
    8. Roberto Iacono & Marco Ranaldi, 2019. "Perceptions of Inequality and Redistribution: A Note," Post-Print halshs-02042330, HAL.
    9. Feld Lars P. & Schmidt Christoph M., 2016. "Jenseits der schrillen Töne," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 17(2), pages 188-205, July.
    10. Corneo, Giacomo & Neher, Frank, 2015. "Democratic redistribution and rule of the majority," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 96-109.
    11. Colagrossi, Marco & Karagiannis, Stelios & Raab, Roman, 2019. "The Median Voter Takes it All: Preferences for Redistribution and Income Inequality in the EU-28," Working Papers 2019-06, Joint Research Centre, European Commission (Ispra site).
    12. Dorn, Florian & Fuest, Clemens & Immel, Lea & Neumeier, Florian, 2018. "Inequality and Extremist Voting: Evidence from Germany," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181598, Verein für Socialpolitik / German Economic Association.
    13. JudithNiehues, 2019. "Soziale Ungleichheit in Deutschland – Wahrnehmung und Wirklichkeit," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 27(02), pages 06-11, April.
    14. Busemeyer, Marius R. & Lergetporer, Philipp & Woessmann, Ludger, 2018. "Public opinion and the political economy of educational reforms: A survey," European Journal of Political Economy, Elsevier, vol. 53(C), pages 161-185.
    15. Kuhn, Andreas, 2019. "The subversive nature of inequality: Subjective inequality perceptions and attitudes to social inequality," European Journal of Political Economy, Elsevier, vol. 59(C), pages 331-344.
    16. Choi, Gwangeun, 2019. "Revisiting the redistribution hypothesis with perceived inequality and redistributive preferences," European Journal of Political Economy, Elsevier, vol. 58(C), pages 220-244.

    More about this item

    Keywords

    biased perception; majority voting; redistribution;

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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