Subjective Perceptions of Inequality and Redistributive Preferences

Views on income inequality and concomitant redistributive preferences are crucial to the design of tax and transfer systems. Although income distribution in Germany, France and Switzerland is very similar, opinions differ widely as to how critically income differences are viewed. This is hardly surprising given that when countries are compared there is almost no connection between the actual distribution of incomes and subjective evaluations of income differentials. In fact, many nationalities assume that the structure of their society is considerably less equitable than it really is. Thus, a factor which far better explains views on distribution is the subjective perception of inequality within a society. Similarly, redistributive preferences are influenced less by actual distribution than by perceived inequality.