The nexus between perceptions of inequality and preferences for redistribution
Bibliographic Data
| ID | 12836639 |
|---|---|
| Authors | Roberto Iacono (0000-0002-7538-8244, Norwegian University of Science and Technology, corresponding author), Marco Ranaldi (0000-0001-8277-3602, City University of New York) |
| Year | 2020 |
| Volume | 19 |
| Issue | 1 |
| Pages | 97-114 |
| Publication date | 2020-12-15 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Journal of Economic Inequality (JOURNAL) |
| Journal identifiers | ISSN: 1569-1721 • E-ISSN: 1573-8701 |
| Publisher | Springer Science+Business Media (PUBLISHER • DE) |
| DOI | 10.1007/s10888-020-09470-7 |
| OpenAlex | W3111723547 |
| Language | EN |
| Citations received | 14 |
| References cited | 23 |
This paper shows that perceptions of inequality are a key factor in the formation of preferences for redistribution and thereby in the determination of the equilibrium redistribution level. We build on the novel stylized facts provided by the survey experimental literature on perceptions of income inequality, highlighting that agents incorrectly estimate the shape of the income distribution because of limited information. Agents with income above the mean believe they are poorer than they actually are, and agents with income below the mean believe themselves to be richer. We revisit the standard framework on the political economy of redistribution and extend it in two ways. First, we introduce a more general two-sided inequality aversion. Second, we incorporate perceptions of income inequality, modeled by assuming that agents form expectations on the income level of the richest and the poorest in society. We show analytically that the equilibrium redistribution level is crucially determined by the interplay between the information treatment correcting the bias in perceptions of inequality and fairness considerations specified by the degree of inequality aversion. By doing this, we add (biased) perceptions of inequality to the list of potential factors explaining why, notwithstanding high inequality, an increase in the desire for redistribution has not been observed in many countries
Demographic economics · Econometrics · Economic inequality · Economics · Income distribution · Income inequality metrics · Inequality · Inequity aversion · Macroeconomics · Microeconomics · Perception · Political science · Politics · Public economics · Public good · Redistribution (election · Redistribution of income and wealth · Stylized fact · Fiscal Policy and Economic Growth · Income, Poverty, and Inequality · Mathematics · Psychology · Social Policy and Reform Studies
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Perceived Inequality as an Impediment to Mass Taxation
How does Inequality Hamper Subjective Well-being? The Role of Fairness
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The Role of Information and Social Interactions in Retirement Plan Decisions
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Social Mobility and the Demand for Redistribution
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Revisiting the redistribution hypothesis with perceived inequality and redistributive preferences
In the eye of the beholder
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Teaching the Tax Code
Misperceiving inequality
Biased perceptions of income distribution and preferences for redistribution
Individual preferences for political redistribution
Richer (and Holier) Than Thou? The Effect of Relative Income Improvements on Demand for Redistribution
How important is rank to individual perception of economic standing? A within-community analysis
A Rational Theory of the Size of Government
| Unique citing works | 14 |
|---|---|
| Citations per year | 2,8 |
| Citation span | 2021 - 2026 (6) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 14 |