Do People Distinguish Income from Wealth Inequality? Evidence from the Netherlands

Thomas Douenne, Oda Sund and Joël van der Weele,

No 19174, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In most countries, wealth inequality is much higher than income inequality, spurring debates about wealth taxation. However, it is unclear if voters are aware of these differences. In a large-scale survey experiment among a representative Dutch population (N=4,501), we study voters' perceptions of income and wealth distributions, and connect their views to administrative data about their own income and wealth. Despite a primer on the definition of income and wealth, respondents underestimate the difference between the top 10% share of income and wealth by a factor of 10. Moreover, they use information about the income distribution to make predictions about the wealth distribution and vice versa, even when information about both is provided, further demonstrating confusion about the two types of inequality. An information intervention about actual inequality levels and personal ranks in the income/wealth distribution has an impact on the perceived inequality and perceived fairness of inequality, but little effect on policy preferences. We discuss implications for political debates about inequality and wealth taxation.

Keywords: Inequality; Information provision; Redistribution (search for similar items in EconPapers)
JEL-codes: D31 D63 H31 P16 (search for similar items in EconPapers)
Date: 2024-06
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