the disagreement about measures to overcome this is also increasing.

VS – 01/2022

The Does Inequality Matter? study examines how people in OECD countries think about inequality in their own country. As recently as the late 1980s/early 1990s, respondents believed that top earners earned five times as much as low-income earners on average. Today, this perceived ratio of high to low-income earners has risen to 8.

People's perception is not detached from reality

The study analyses the degree of correlation between perceived and actual income inequality. In fact, the income gap has widened over the past three decades and social mobility has stagnated in many OECD countries. Income inequality also tends to be perceived as being greater and rising in those countries, where measured income inequality is also higher and rising.

Tolerance of inequality has also increased albeit to a lesser extent

The study examines attitudes toward inequality and redistributive policies. Today, people generally believe that top earners should earn four times as much as lower earners, compared with three times in the late 1980s.

Differences between countries

At least 6 out of 10 OECD citizens believe their government should do more to reduce the income gap between rich and poor through taxes and transfers. Here, the more people are concerned about inequality and perceive low social mobility, the greater their demand for redistribution.

However, demands for policy measures also depend heavily on notions about the effectiveness of policy and the determinants of inequality. People are less likely to call for greater redistribution if they think benefits are non-targeted, and they are less supportive of progressive taxation if they are convinced of widespread corruption.

The demand for more progressive taxation is also lower if people consider inequalities to be justified by differences in personal effort rather than by circumstances over which people have no control. In Poland in 2018, for example, one in four believed that poverty primarily stems from a lack of effort and has less to do with injustice. In Germany, only four per cent of respondents held this view, in Austria six per cent and in Belgium seven per cent. Accordingly, far fewer people in Poland called for more progressive taxation (54 per cent) than in Germany (77 per cent), Austria (71 per cent) and Belgium (67 per cent).

In most countries, the gap between those who perceive inequality to be high and those who perceive it to be low in all likelihood has grown over the past three decades. What is striking here is an increasing polarisation in people's views about inequalities in their country within groups with similar socio-economic characteristics, such as income or education level.