By Martine Zaïda
Statistics on income inequality are regularly produced by researchers and statistical offices around the world, and often make news headlines.
What remains unclear is how much inequality people perceive and what degree of inequality they regard as ‘ideal’ or ‘acceptable’. The latter (i.e., preferences for how income and other valuable resources are distributed) has a long history in social sciences (Bénabou and Tirole, 2006; Osberg and Smeeding, 2006), whereas the former (i.e., to what extent people have a good appreciation of income distributions in their country and of their position in it) has received less attention although it is—arguably—just as important.
Research based on data from the 2009 wave of the International Social Survey Programme on social inequality shows people systematically misperceive the level of income inequality in their own country, although often in different directions (Nieheues, 2014).
For example, while people living in Hungary, Slovenia and the Czech and Slovak Republics overestimate the income inequality in their country, those living in the Nordic countries seem to be aware they are living in a relatively equal society. Meanwhile, people living in the United States substantially underestimate the extent of income inequality.
The issue of people’s (mis)perception of income inequality also has attracted the interest of national statistical agencies. In 2011, the French National Institute of Statistics and Economic Studies (INSEE) launched a survey asking respondents to position themselves on the income scale. The results showed that, while for 45% of respondents there was little discrepancy between perceptions and realities, most poor people (three out of five) overestimated their position and most rich people (four out of five) underestimated it.
Similarly, a survey conducted by TNS Gallup in Finland showed that, while most people’s idea of ‘low income’ corresponds quite closely to that used by Statistics Finland, the respondents’ own income influenced their perception; to wit, the higher their income, the higher their view of what ‘low’ and ‘high’ income is.
The Organisation for Economic Co-operation and Development’s (OECD) new Compare your income web-tool allows users from different OECD countries to compare perceptions and realities by looking at where they fit in their country’s income distribution. The tool, which is similar to those available in a number of countries, is based on the most recent data from the OECD Income Distribution Database.
With the objective of better understanding the public’s perceptions of income inequality, Compare your income will gather information allowing the OECD to do different types of analysis on whether people have a good appreciation of income distribution in their country and how they position themselves within that distribution.
In order to collect sufficient information, OECD needs as many people as possible to use Compare your income. The organization invites you to share this new web-tool with your colleagues, friends and family. Now you can find out what’s your share of the pie!
The information collected by this tool is completely anonymous and confidential. For more information about the OECD’s work on income inequality, go to the OECD Income Distribution Database or send an email to firstname.lastname@example.org.
Zaïda is the communications coordinator for the OECD Statistics Directorate.