An Empirical Analysis of the Determinants of Perceived Inequality

Abstract

Perception of inequality is important for the analysis of individuals' motivations and decisions and for policy assessment. Despite the broad range of analytic gains that it grants, our knowledge about measurement and determinants of perception of inequality is still limited, since it is intrinsically unobservable, multidimensional, and essentially contested. Using a novel econometric approach, we study how observable individual characteristics affect the joint distribution of a set of indicators of perceived inequality in specific domains. Using data from the International Social Survey Programme, we shed light on the associations among these indicators and how they are affected by covariates. The approach also gives insights on some results in the literature on inequality. The role of many subjective indicators for the perception of inequality is re‐examined and examples of policy applications are reviewed. The importance of our empirical approach to the measurement of perceived inequality is, in so doing, reinforced.

I know people who can and who cannot: A measure of the perception of economic inequality in everyday life

“…Left-wing individuals tend to consider economic inequality as unfair because they do not believe that economic success is always due to personal effort or, in general, to individual factors that can be controlled (Anderson & Singer, 2008;Bavetta et al, 2017;Hadler, 2005). Accordingly, for left-wing individuals, the PEIEL scale does not predict tolerance of inequality in the same way, probably because these individuals are already predisposed to reject it.…”

“…Additionally, some surveys use a generic item (see Bavetta, Li Donni & Marino, 2017;Castillo, Miranda & Carrasco, 2012). These methods produce differences in the estimation of perceived inequality levels (Bavetta et al, 2017).…”

Polarized perceptions, polarized preferences? Understanding the relationship between inequality and preferences for redistribution

“…Corneo and Gruener, 2002; Linos and West, 2003) and argue that these factors are also associated with inequality perceptions. The economic situation as well as initial (ideological) preconceptions about the world influence the way individuals perceive inequalities (Bavetta et al, 2019). Potential mechanisms that stratify perceptions are political information (Iversen and Soskice, 2015), networks (Cruces et al, 2013), culture (Evans, 2004; Gijsberts, 2002) 5 or psychological mechanisms such as the status quo bias (Trump, 2018).…”

When the American dream fails: The effect of perceived economic inequality on present‐oriented behavior

“…A limitation of this study is that due to the characteristic of archival data, we only observe a set of manifest indicators which indirectly gauge the respondent's perceptions of inequality and its effect. This difficulty is common to any study on the perception of inequality (Bavetta et al, 2019). We have to use proxy variables to measure the intended concepts.…”

“…We compared the average incomes of first and fifth quintile of South Korea to assess income inequality and related this variable with various social indexes that were likely to represent temporal behaviors including book consumption trend, birth rate, and number of people traveling overseas. According to the literature, among 19 OECD countries from the Social Inequality Module of the International Social Survey Program (ISSP), perceived inequality is high in South Korea (Bavetta, Li Donni, & Marino, 2019).…”