"A 20% income increase for everyone?": The effect of relative increases in income on perceived income inequality

Christophe Lembregts and Mario Pandelaere

Journal of Economic Psychology, 2014, vol. 43, issue C, 37-47

Abstract: Most research on income inequality implicitly assumes that a fixed percentage increase in income across all income levels does not alter income inequality. In contrast with this assumption, we show that relative increases in income lead to increased perceptions of inequality, even when buying power is held constant. In a second experiment, we extended these findings using a fictitious currency, thereby eliminating effects of using a familiar currency. In study 3, we demonstrate that feelings of envy and fairness are affected by a fixed percentage income increase.

Keywords: Income inequality; Absolute differences; Relative thinking; Numerosity (search for similar items in EconPapers)
JEL-codes: C91 D63 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:43:y:2014:i:c:p:37-47

DOI: 10.1016/j.joep.2014.04.008

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