Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 22/2023: Fairness Beliefs Affect Perceived Economic Inequality

Morten Nyborg Støstad ()
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Morten Nyborg Støstad: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway

Abstract: This paper establishes a causal link from fairness beliefs to perceived economic inequality. I conduct an experiment where participants are asked to estimate various income inequality measures of hypothetical societies. While the true income distributions of the societies remain identical and simple, the description of the societies varies to indicate “fair” and “unfair” inequality across respondents. Describing the society as “unfair” increases the incentivized estimated top 10% income share as much as the actual difference between Denmark and the United States. Other inequality metrics are similarly affected. The findings imply that ideological beliefs fundamentally alter how people perceive economic inequality.

Keywords: Fairness; Economic inequality; Income inequality

JEL-codes: H23; J18

Language: English

15 pages, December 18, 2023

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