What People Believe Others (Should) Earn – Multifactorial Survey Experiments on Beliefs about Actual and Fair Earnings

Speaker: Sandra Gilgen, First Author: Katrin Auspurg, Co-Authors: Paul Hufe, Andreas Peichl, Laila Schmitt, Marc Stöckli Abstract: While people generally perceive income inequality as too high, low-earners tend to overestimate their position within the earnings hierarchy, while high-earners tend to underestimate theirs. To examine the mechanisms behind these differences and inaccuracies in perceptions and how they relate to perceptions of fairness, we designed a novel multifactorial survey experiment addressing four intertwined research questions: (1) Are perceptions of earnings distributions in line with factual distributions and with what is considered fair? (2) If not, what factors underlie possible misperceptions? For example, do (some) individuals generally misperceive wages in certain occupations, or do they primarily misperceive returns to education or the gender wage gap? (3) To what extent do different social groups align or diverge in their perceptions? (4) How are misperceptions and fairness preferences associated with preferences for redistribution? Our multifactorial survey experiment was implemented in a large survey of the German general population (SOEP Innovation Sample) in 2019. Respondents evaluated the earnings of several hypothetical employees. Experimental manipulations included information on gender, job and employment type, working hours, their performance level at the job, family status, region (East/West), and wages. Each of the vignettes was rated in regard to the fairness of the reported earnings and additionally on how realistic respondents perceived these earnings to be.