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By:Thiam Chye Tay
Published on 2013 by

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A country's level of objective income inequality and a person's income are predictors of individual level redistributive preferences. These theoretical assertions arise from formal models that ignore the subjective dimensions of income inequality. A country's level of objective income inequality, usually measured in Gini ratios, affects the life chances of individuals but not a person's normative values about income inequality. Such subjective dimensions of income inequality are important because they affect substantive outcomes. This dissertation examines the determinants of one subjective dimension of income inequality, individual tolerance for income inequality, and its effect on a person's redistributive preferences. This dissertation contributes to the income inequality literature by conceptualizing and testing the determinants of individual tolerance for income inequality. Using a cross-nation dataset of 87 countries, I show that an individual's subjective social status affects his level of tolerance for income inequality and I present a counterintuitive finding: a country's level of wealth and objective income inequality do not systematically affect an individual's level of tolerance for income inequality. Substantively, a person who lives in a poor country with high objective income inequality (e.g., Nigeria) and another person who lives in a rich country with low objective income inequality (e.g., Switzerland) are equally likely to feel that their respective country's level of income inequality is not too high. Redistribution is a government's way of reducing inequality but people who live in the same country have different levels of preferences for redistribution. This dissertation's second contribution is to the redistribution literature. I argue that a person's level of tolerance for income inequality and other socio-economic characteristics (e.g., income) affect his preferences for redistribution. Specifically, a person who feels that his country's level of objective income inequality is too high is more likely to support government redistribution. Contrary to extant studies, this dissertation finds that a country's level of wealth and objective income inequality do not systematically affect its citizens' preference for redistribution. I argue that the crux of the theoretical and empirical connections between redistribution and inequality are the multiple income inequalities that citizens perceive and a country's level objective income inequality, by itself, does not systematically affect a person's degree of preference for redistribution.

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