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Perceptions of Income Inequality PDF
By:Susanna Henighan Potter
Published on 1999 by

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Household income is one of the most common variables in economic models. Theory and logic tells us that it will influence a whole range of household choices, from the decision to go to school, to the decisions to change jobs or move. Income is also used in range of political science and sociological models. These models use income and relative economic position to explain political and social behavior. On the face of it income seems to be a straightforward concept, once you have included and excluded all relevant income streams. It also seems reasonable to assume that individual households know their income, and make decisions based on that knowledge. What if, however, households don't really know how much they earn? Or, more accurately, what if they know how much they earn, but they don't really know the significance of their income relative to others? This is one question that emerges from the research discussed in this paper. Based on interview data, this exploratory study finds several trends about perceptions of income and income inequality on which further research could be based. Among them is the fact that most people are not able to accurately place their income on a schematic representation of the overall income distribution. Other findings suggest that certain groups of people are most interested in changing income distribution. Still others suggest that most people judge their income and income satisfaction by comparing themselves to people who are like them- people who live near them, have similar education to them, and look like them. These and other findings will be discussed in this paper. It will examine in turn the respondents' perceptions and opinions about income inequality, their perceptions about their own income, their opinions about equality and inequality in the abstract, and the models they seem to use to explain economic change.

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