Biased Perceptions of Income Inequality and Redistribution

23 Pages Posted: 8 Jul 2014  

Carina Engelhardt

Leibniz Universität Hannover - Economics and Business Administration Area

Andreas Wagener

Leibniz Universität Hannover - Economics and Business Administration Area; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Vienna University of Economics and Business Administration

Date Written: June 12, 2014

Abstract

When based on perceived rather than on objective income distributions, the Meltzer-Richards hypothesis and the POUM hypothesis work quite well empirically: there exists a positive link between perceived inequality or perceived upward mobility and the extent of redistribution in democratic regimes – though such a link does not exist when objective measures of inequality and social mobility are used. These observations highlight that political preferences and choices might depend more on perceptions than on factual data.

Keywords: biased perception, majority voting, redistribution

JEL Classification: H530, D720, D310

Suggested Citation

Engelhardt, Carina and Wagener, Andreas, Biased Perceptions of Income Inequality and Redistribution (June 12, 2014). CESifo Working Paper Series No. 4838. Available at SSRN: https://ssrn.com/abstract=2463129

Carina Engelhardt

Leibniz Universität Hannover - Economics and Business Administration Area ( email )

Koenigsworther Platz 1
30167 Hannover
Germany

Andreas Wagener (Contact Author)

Leibniz Universität Hannover - Economics and Business Administration Area ( email )

Koenigsworther Platz 1
30167 Hannover
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Vienna University of Economics and Business Administration ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

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