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Misperceiving Inequality

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  • Gimpelson, Vladimir

    () (CLMS, Higher School of Economics, Moscow)

  • Treisman, Daniel

    () (University of California, Los Angeles)

Abstract

Since Aristotle, a vast literature has suggested that economic inequality has important political consequences. Higher inequality is thought to increase demand for government income redistribution in democracies and to discourage democratization and promote class conflict and revolution in dictatorships. Most such arguments crucially assume that ordinary people know how high inequality is, how it has been changing, and where they fit in the income distribution. Using a variety of large, cross-national surveys, we show that, in recent years, ordinary people have had little idea about such things. What they think they know is often wrong. Widespread ignorance and misperceptions of inequality emerge robustly, regardless of the data source, operationalization, and method of measurement. Moreover, we show that the perceived level of inequality – and not the actual level – correlates strongly with demand for redistribution and reported conflict between rich and poor. We suggest that most theories about political effects of inequality need to be either abandoned or reframed as theories about the effects of perceived inequality.

Suggested Citation

  • Gimpelson, Vladimir & Treisman, Daniel, 2015. "Misperceiving Inequality," IZA Discussion Papers 9100, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp9100
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    Cited by:

    1. Ovcharova, L. & Popova, D. & Rudberg, A., 2016. "Decomposition of Income Inequality in Contemporary Russia," Journal of the New Economic Association, New Economic Association, vol. 31(3), pages 170-186.
    2. Farzanegan, Mohammad Reza & Krieger, Tim, 2017. "The response of income inequality to positive oil rents shocks in Iran: Implications for the post-sanction period," Discussion Paper Series 2017-04, University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy.
    3. Peter Mihalyi & Iván Szelenyi, 2016. "Two different sources of inequalities: profits and rents in advanced market economies," IEHAS Discussion Papers 1630, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    4. Carina Engelhardt & Andreas Wagener, 2016. "What do Germans think and know about income inequality? A survey experiment," Working Papers 389, ECINEQ, Society for the Study of Economic Inequality.
    5. Bruce M. Owen, 2015. "What Would Madison Say?," Discussion Papers 15-006, Stanford Institute for Economic Policy Research.
    6. Kuhn, Andreas, 2015. "The Individual Perception of Wage Inequality: A Measurement Framework and Some Empirical Evidence," IZA Discussion Papers 9579, Institute for the Study of Labor (IZA).
    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. Philipp Poppitz, 2016. "Does self-perceptions and income inequality match?," IMK Working Paper 173-2016, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    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. Josef Melchior & Martin Schürz, 2015. "Gerechtigkeitsurteile und Vermögensverteilung in Österreich - Wahrnehmung der Realität und Realität der Wahrnehmung von Ungleichheit," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 41(2), pages 199-233.
    11. Germán Reyes & Leonardo Gasparini, 2017. "Perceptions of Distributive Justice in Latin America During a Period of Falling Inequality," CEDLAS, Working Papers 0209, CEDLAS, Universidad Nacional de La Plata.
    12. Ekaterina Borisova & Andrei Govorun & Denis Ivanov, 2016. "Bridging or Bonding? Preferences for Redistribution and Social Capital in Russia," Working Papers 05/2016, IMT Institute for Advanced Studies Lucca, revised Nov 2016.
    13. Grigoryev, L., 2016. "Social Inequality in the World - the Interpretation of Not-Evident Tendencies," Journal of the New Economic Association, New Economic Association, vol. 31(3), pages 160-170.
    14. Alan Duncan & Astghik Mavisakalyan & Yashar Tarverdi, 2016. "Self-assessed versus statistical evidence of labour market discrimination The case of indigenous Australians," WIDER Working Paper Series 070, World Institute for Development Economic Research (UNU-WIDER).
    15. Mohammad Reza Farzanegan & Tim Krieger, 2018. "Oil Rents Shocks and Inequality in Iran," CESifo Working Paper Series 6876, CESifo Group Munich.

    More about this item

    Keywords

    inequality; income distribution; biased perceptions; preferences for redistribution;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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