Income Misperception And Populism

Speaker: Felix Kersting, Co-Authors: Thilo N. H. Albers, Fabian Kosse Abstract: Across many Western countries, we observe a rapid increase in support for right-wing populist parties. However, we lack knowledge on the specific mechanisms through which economic and cultural factors fuel populism. In this paper, we attempt to fill this gap by investigating the role of perception, a powerful factor in many other cases like support for redistribution and migration. For our study, we design a questionnaire that elicits the individuals’ relative perceived income position and populist attitudes. We embed our survey in the Innovation Sample of the German Socio-Economic Panel (SOEP), a representative longitudinal survey of German households. The descriptive results show that individuals with more negative (i.e., pessimistic) perceptions of their income have more right-wing populist views relative to individuals with the same objective position in the income distribution. To establish causality, we use the difference between the individuals’ position in the local and national income distribution as instrumental variable. The IV results confirm our reasoning: the coefficient stays highly significant. Dissecting our data further, we find strong evidence for substantial gender differences: our effect is driven by the male part of our sample. This difference does not result from differences in belief formation and even holds when relying only on household variation.