What are people talking about when they talk about inequality?
The Lay Understanding of Inequality
An exploratory research
presented at international marketing conferences
Income Inequality by Country
(measured by Gini index, based on World Bank data from 1992-2020)
“Income Inequality is the defining challenge of our time”
— Barack Obama
Research Question
While prior research extensively examines how people perceive the level of inequality, little has been known about what inequality means to them.
Do they associate rising economic inequality more with an increase in poverty or in affluence?
As an exploratory study, we do not have a priori hypotheses.
Studies
1. Survey
Sample: a nationally representative sample recruited through Qualtrics
Sampling method : stratified proportional sampling based on multiple characteristics, including gender, ethnicity, religion, and political ideology
Design:
Analysis: mixed-effect OLS regression (i.e., multi-level modeling) with three fixed effects (Gini, Group - poverty vs. affluence & Gini * Group) and a random intercept (to assess the variance in the responses caused by systematic differences between individuals)
Key Insights:
People associate rising income inequality significantly more with an increase in poverty (vs. affluence), regardless of how it varies—across countries or over time.
2. Implicit Association Test (IAT)
IAT: measures the strength of associations between abstract concepts, such as how the abstract notion of inequality is associated with poverty / affluence.
Sample: Individuals recruited from Amazon Mechanical Turk
Analysis: D-score, i.e., the standardized difference score, which measures the difference in the strength of people’s implicit association between inequality and poverty (vs. affluence)
Key Insights:
People associate the abstract notion of inequality in general significantly more with poverty (vs. affluence), regardless of various demographic characteristics, such as their gender, race, socioeconomic status, and political ideology.
Conclusion
People associate income inequality more with poverty (vs. affluence). This lay understanding is not limited to income inequality but can be extended to the abstract notion of inequality.
These findings provide implications for policy making.
Policy Implications
A New Form of Misperception of Inequality
The Share of Adults Living in Each Income Group
The Change in the Share of Adults Living in Each Income Group
(vs. a decade ago)
source: U.S. Bureau of Census, Pew Research Center
People’s lay understanding of income inequality, associating it more with poverty (vs. affluence), is opposite to reality, as rising income inequality is more related to an increase in the upper- (vs. lower-) income group.
This perception-reality discrepancy represents another form of the misperception.
A Paradox
Although “A majority (55%) of Americans believe that the wealth distribution in the U.S. is unjust“, over two-thirds (62%) of them oppose redistributing wealth from the rich to the poor (Cato Institute 2019).
Our findings offer a possible explanation to this paradox:
Since people associate income inequality more with poverty than affluence, they tend to perceive redistributive penalties imposed on the rich as less justified. Instead, they are likely to to prefer direct aid to the poor.