Misperceptions of Inequality and Redistributive Preferences in Europe

It is generally accepted that people are poorly informed about the distribution of resources in society, but there remains uncertainty about the degree to which their perceptions deviate from reality, how misperceptions correlate with socioeconomic characteristics, and the extent of differences between countries. We also lack comparative evidence on whether information about inequality moves people’s redistributive preferences. Conventional political economy arguments would suggest an SES gradient in misperceptions (high-SES individuals are better informed) and a thermostatic response to information about inequality (individuals who underestimated inequality should become more supportive of redistribution, and vice versa). We investigate these arguments based on a large experimental survey in seven European countries (Denmark, France, Germany, Ireland, Italy, Netherlands, Sweden). We asked respondents to estimate the shares of income and wealth that accrue to the top-10% in their country. In randomized treatments, we then presented respondents with factual and easy-to-understand information about either top-10% income shares, top-10% wealth shares, or both (or none, in the control group). Following the treatment, we ask a range of questions eliciting general redistributive and income, capital gains, inheritance, and wealth tax preferences. We document that people across Europe have difficulty distinguishing between income and wealth inequality, providing estimates around 60% for both. Hence, while their estimates of top-10% wealth shares are on average reasonably accurate, they tend to substantially overestimate income inequality as measured by top-10% shares. We find no consistent evidence for an SES gradient in misperceptions: While household income is associated with a lower likelihood of overestimating top income shares, having a university degree is linked to a higher likelihood of overestimating top wealth shares, and housing wealth is unrelated to misperceptions. Despite these widespread misperceptions, especially of income inequality, we find little support for a thermostatic response to information about inequality. While wealthy and high-income individuals as expected are less supportive of a range of redistributive policies, information about inequality does not systematically affect redistributive preferences. This is true of all treatments and holds across countries. Our study highlights that inequality, despite its political salience, remains a low-information environment. However, factual information about inequality on its own is nevertheless unlikely to meaningfully shift redistributive preferences. Instead, fairness considerations or self-interest must be spelled out more directly to galvanize support for redistribution.