Your Place in the World: Relative Income and Global Inequality

Abstract

There is abundant evidence on individual preferences for policies that reduce national inequality, but only little evidence on preferences for policies addressing global inequality. To investigate the latter, we conduct a two-year, face-to-face survey experiment on a representative sample of Germans. We measure how individuals form perceptions of their ranks in the national and global income distributions, and how those perceptions relate to their national and global policy preferences. We find that Germans systematically underestimate their true place in the world's income distribution, but that correcting those misperceptions does not affect their support for policies related to global inequality.

Social Position and Fairness Views

“…Karadja et al (2017) find that a majority of surveyed individuals misperceive their position in the income distribution and believe they are ranked lower than they actually are. Fehr et al (2019) find that respondents are misinformed about their positions in both the global and national income distributions.…”

“…Conversely, Karadja et al (2017) show that those who underestimated their position demand less redistribution. Fehr et al (2019) provide information about position in both the national and international distribution and find that only demand for national redistribution decreases with national relative income. Perez-Truglia ( 2020) studies a natural experiment in Norway that made tax records and incomes easily visible online.…”

Information about Fewer Audits Reduces Support for Economic Relief Programs

“…We contribute to this literature by showing that information about audits also affects trust in the tax administration and policy preferences. 1 More generally, we contribute to the political economy literature using information provision experiments to study beliefs and public policy preferences (Alesina et al, 2018;Cruces et al, 2013;Fehr et al, 2019;Grigorieff et al, 2020;Haaland and Roth, 2019;Karadja et al, 2017;Kuziemko et al, 2015;Lergetporer et al, 2018;Roth et al, 2019). 2 This literature has mostly found muted impacts of information on public policy preferences.…”

Learning about inequality and demand for redistribution

“…• Few papers try to examine whether the information influences preferred inequality (Trump, 2018[24]; Engelhardt and Wagener, 2018 [46]; Campos-Vazquez et al, 2020 [42]). If people adapt their preferences to the higher level of inequality usually associated with the information, then this might explain the scarce elasticity.…”