Foreword
ISO country codes
Executive summary
1. Overview
1.1. The COVID-19 crisis has opened a window of opportunity for addressing inequalities
1.2. Peopleโs average perceptions of inequality tend to mirror conventional statistical indicators, although with some differences
Average perceptions of inequality correlate with conventional estimates of income disparities and intergenerational persistence
In recent decades, as income inequality has risen in many OECD countries, so has peopleโs concern over income disparities
1.3. Growing concern over inequality increases demand for redistribution, but do not necessarily spell widespread support for all policies
Peopleโs perceptions and concern determine their preferences for income redistribution
Beyond perceptions of inequality, peopleโs views of the role of government and the effectiveness of policies matter
1.4. In most countries, public opinion on inequality is divided
1.5. Conclusion: understanding peopleโs perceptions of and concern about inequality can help design the reforms that lie ahead
References
Annex 1.A. Measuring and interpreting perceptions and preferences of inequality
Notes
2. How do people perceive economic inequalities?
2.1. How peopleโs concern over income disparities has evolved
Concern about income disparities is great and growing
Changes in concern are related to changes in observed inequality
Peopleโs concern over income disparities is shaped by their perceptions and preferences
2.2. Behind concern over income disparities lie peopleโs perceptions of income and earnings disparities
Perceived income and earnings disparities are wide
Most people believe that intergenerational income persistence is high and related to inequality of outcomes
Perceptions are correlated with conventional measures, but do not necessarily align with them
Perceived top-bottom earnings ratios have grown over time
The pandemic has raised awareness of economic disparities
2.3. To what extent do people tolerate inequality
Preferred economic disparities are lower and more homogeneous across countries
Preferred earnings disparities are larger in more unequal countries
Preferred earnings disparities have increased over time
Round-up: Perceptions of wider disparities explain to a large extent the increase in concern
References
Annex 2.A. Data sources
International Social Survey Programme
Eurobarometer 471/2017
Risks that Matter
Compare Your Income
Notes
3. How does inequality shape the demand for redistribution?
3.1. Perceptions of inequality and the demand for redistribution
Perceptions of and concern over inequality are key drivers of cross-country differences in preferences for redistribution
Individualsโ perceptions of country-wide inequality matter as much as their own income in explaining demand for redistribution
Experiencing hardship during the COVID-19 crisis is associated with greater demand for redistribution
3.2. Actual inequality and demand for redistribution
Rising income inequality is associated with greater demand for redistribution
The association between income inequality and preferences for redistribution is driven by rising concern over income disparities
There are indications that support for redistribution has increased during the COVID-19 crisis
Higher redistribution lowers peopleโs demand for further intervention
3.3. Inequality, relative income and preferences for redistribution
High-income individuals demand less redistribution, but not because they perceive smaller disparities
Greater income inequality shapes individual demand for redistribution through both relative income and social preferences
Most people believe they belong to the middle class
3.4. What shapes the association between income inequality and preferences for redistribution?
Concern over income inequality does not fully translate into higher demand for redistribution
The perceived effectiveness of redistribution policies influences public support
The drivers of trust in public institutions shape demand for redistribution
The preferred mix of redistributive policies varies across people and countries
The supply of public policies
Round-up
References
Annex 3.A. Methodological details
Estimates of the effect of inequality on preferences for redistribution by income
Notes
4. Has the public opinion become more divided?
4.1. The dispersion of perceptions and concern
Perceptions are widely dispersed and polarised
Most disagreement is between people with similar socio-economic characteristics
The extensive disagreement in perceptions translates into concern
More unequal countries have a more divided public opinion
4.2. Has the extent of disagreement between people increased?
The distribution of perceptions and concerns has long become more dispersed and polarized
Most of the increased dispersion of perceptions of and concern over earnings disparities is among people with similar socio-economic characteristics
References
Annex 4.A. Additional figures
Annex 4.B. Methodological details
Decomposition of changes in dispersion into compositional effects and between-groups variance
Notes
5. Implications for policy
5.1. Implications for gathering public support for redistributive policies
Perceptions of income inequality and intergenerational persistence are closely bound up
Perceptions of inequality and demand for redistribution are highly heterogeneous and lead to support of different policy mixes
Policy effectiveness determines policy support
A strongly divided public opinion challenges reforming action, but information can help
5.2. Implications for interpreting and analysing peopleโs perceptions of inequality
More granular data on the entire distribution of perceptions and concern
Preferences for concrete policy options
Perceptions of the effectiveness of redistributive policies
How perceptions and concern evolve over time
References
Notes
