Inequality in People's Minds

Abstract

The extent of inequality that people perceive in the world is often a better predictor of individual and societal outcomes than the level of inequality that actually exists. As such, scholars from across the social sciences, including economics, sociology, psychology, and political science, have recently worked to understand individuals’ (mis)perceptions of inequality. Unfortunately, many researchers treat the process underlying such perceptions as a black box, focusing predominantly on lay people’s numeric estimates of inequality, and paying less attention to how people come to form these perceptions or what these perceptions mean to participants. In the current review, we draw on research in perception, cognition, and developmental and social psychology, to introduce a novel comprehensive framework for understanding individuals’ perceptions of inequality. We argue that subjective perceptions of inequality should be viewed as a process that unfolds across five interlinked and iterative stages. To form perceptions of the scope of inequality in society, people need to (1) have access to inequality cues in the world, (2) attend to these cues, (3) comprehend these cues, (4) process these cues (often succumbing to motivational biases), and (5) summarize these cues into a meaningful representation of inequality. Our framework highlights when and why lay people may misperceive the scope of inequality in society and provides a roadmap for research to examine how the processes in people's minds affect the outcomes researchers are ultimately interested in.

The social psychology of economic inequality

“…Although perceptions of inequality (Hauser and Norton 2017;Phillips et al 2020), the association between inequality and well-being , the psychological consequences of income inequality , and the social psychology of inequality (Jetten and Peters 2020) have been reviewed elsewhere, in this review I attempt to offer a broader perspective than previous reviews, drawing not only on the psychological literature but also, where relevant, on economic and sociological literature in order to provide an overview of the main findings regarding human perceptions of and preferences about economic inequality, the various psychological consequences of economic inequality, micro and macro moderators of these effects, and issues of measurement. I also attempt to identify gaps in the literature to encourage future research.…”

“…This is perhaps not surprising considering that the real distribution is often not accurately represented in the range of figures from which respondents get to choose. Nonetheless, these measures significantly predict relevant political attitudes, such as preferences regarding resource redistribution, while objective measures of inequality (e.g., Gini) often do not (Niehues 2014), suggesting that the level of economic inequality in people's heads is what matters for their opinions about issues related to inequality (Phillips et al 2020).…”

“…Measuring perceptions and ideal levels of inequality is challenging because individuals' estimates are subject to many forms of bias. Much of this bias is due to the accessibility of knowledge about inequality, which is derived from their personal experience; it is therefore meaningful and informative about how individuals experience inequality (Jachimowicz et al 2020;Phillips et al 2020). I describe these biases below.…”

“…The latter-where respondents' ideal pay ratios were larger than their estimates of actual pay ratios, but the respondents also indicated that they believed inequalities in pay were too large-is semantically illogical, and so suggests that respondents' estimates were anchored to the figures with which they had previously been presented. It seems, therefore, that individuals' perceptions of inequality anchor their desired levels of inequality (García-Sánchez et al 2019;Pedersen and Mutz 2019;Phillips et al 2020).…”

“…This latter process is particularly susceptible to the anchor-and-adjustment heuristic, with percentages thought to be anchored to the proportion of the population that respondents are asked to consider (e.g., quintile estimates are anchored to 20 per cent) (Eriksson and Simpson 2012). These are challenges of measurement that must be considered carefully when researchers aim to assess perceptions of inequality (see Jachimowicz et al 2020;Phillips et al 2020). However, there are also numerous other sources of bias, which mostly alter the accessibility of information regarding inequality.…”