Are some forms of inequality seen as more unfair than others?
Guess the income level of those at the 50th percentile and those at the 95th of the income distribution in Denmark. And then guess your position in the distribution. If you are well off chances are that you misperceive your position in the distribution lower than it actually is - and vice versa.
Kristoffer Balle Hvidberg and Claus Thustrup Kreiner from CEBI have studied people’s perception of inequality together with Stefanie Stantcheva from Harvard University and published thair findings in the working paper "Social Positions and Fairness Views on Inequality".
They find a clear pattern of center bias in people's perception of their position in the income distribution. Why? The reason is not, that we estimate the general income levels wrongly or that we do not know how the amount on our paycheck. The reason is, that people with a higher income than average tend to overestimate other people’s incomes, while those with lower incomes tend to underestimate other people’s incomes.
Specifically, people misperceive the level of inequality amongst people with the same level of education and working in the same sector. And the social positions are correlated with the views of fairness – those who think they are ranked higher in a given group believe that inequality is less unfair and that income differences are the result of effort rather than luck.
At all positions in the distributions, respondents believe that inequality within education and sector group is more unfair than inequality within cohort, gender or municipality and people are less informed about the inequality and social position in the precise contexts where it matters most to them.
You can watch the explainer on Youtube and read the working paper here.