Perceptions of Inequality

Commissioner: Bertelsmann Stiftung
Duration: June 2015 - April 2016

Brief description:

How does information that we see and hear influence our understanding of economic inequalities as well as our views on policies? The degree of inequality differs across countries as do the implemented policies but what systematic patterns arise? Ideally, policy should be based on facts and reflect the opinion of the population; however, to what degree is that truly the case? Our analysis aimed to shed more light on these topics. To this end, we conducted a cross-country study in cooperation with the Bertelsmann Stiftung in Brazil, France, Germany, Russia, Spain, Sweden, the United Kingdom, and the United States. The data collection was carried out online, using a randomized survey experiment. Afterwards, the HWWI investigated the data using multivariate regression analysis. The main findings are:

  • Across all sample countries, a majority of the population experiences difficulties in correctly estimating its position within the income distribution.
  • Except for Brazilians, respondents on average perceive themselves as relatively poorer than they truly are.
  • On top of this, individuals in all countries tend to overestimate (sometimes significantly) the domestic unemployment rate.
  • Participants reporting a lower income see themselves as relatively richer than they actually are, while those reporting a higher income believe they are lower on the income scale than in reality.
  • Our findings suggest that providing people with additional information on income inequality creates a convergence in redistribution preferences across most sample countries.