Photo: Adam Patterson/Oxfam

A lot of Oxfam’s and the external research on economic inequality focuses on the extent of inequality, its causes and consequences as well as its different forms. But is this enough? How do people perceive inequality irrespective of the reality of it? 

A few pieces of research on inequality perceptions have started to emerge in the last years in different countries. What is becoming clear is that this type of research is adding nuance to the rest of the inequality research by providing some well-grounded evidence around what narratives and myths need challenging when it comes to inequality based on what people actually think inequality looks like. 

Here is an example of what Oxfam has done in the space of investigating economic inequality perceptions. In a recent research jointly carried out by the Australian National University and Oxfam, representative surveys of over 30,000 people were undertaken. Respondents were from 10 different countries, representing over one-third of the world population, namely: India, Mexico, Morocco, Netherlands, Nigeria, South Africa, Spain, Australia, the United Kingdom and the United States. The surveys asked people to estimate how unequal the income distribution in their own country was, where they believed they were placed within their own country’s income distribution, CEOs’ salaries in their country as well as what an acceptable level of inequality would be. 

These were the four main findings of the research, broadly similar across the surveyed countries.

Firstly, people tend to largely underestimate the extent of inequality in their country. Almost half of the people believed their own country to be more or much more egalitarian than it actually is.

Secondly, despite the recent polarisation of the income distribution in most countries, the majority of people think they are ‘middle class’ regardless of whether they are actually rich or poor.

Thirdly, people massively underestimate the ratio of the wages of CEOs relative to ordinary workers. For example, respondents from South Africa thought this ratio to be in average equal to 28:1, against the real figure of 500:1.

Finally, despite these rosy notions about the scale of inequality and erroneous self-placement in the income distribution, across all countries in the sample poor and rich people alike want inequality to be much lower.

So why do these results matter? The estimated extent of inequality matters because those who perceived higher levels of inequality were much more likely to agree or strongly agree that the gap between rich and poor was too large. If people’s perceptions of inequality are often inaccurate and these inaccurate perceptions predict policy preferences, correcting such perceptions has the potential to influence people’s attitudes toward redistributive policies. Policymakers who are trying to address inequality should be aware that people may be less supportive of redistributive policies because they are unaware of just how unequal their society is.

And that’s where Oxfam’s campaigns and programs could benefit from the knowledge produced by this type of research, by knowing more about where people are in terms of perceptions of inequality, what myths need a loud de-bunking, as well as going one step further and trying to imagine which world would people like to live in should they know what the world they are currently living in looks like.

The first step in trying to reduce inequality appears to be communicating to the public just how unequal their society is and then what can be done to address it. And in order to do that, both actual and perceived levels of inequality matter!