Journal of Economic Psychology2014-08-18 6:27 PM

"A 20% income increase for everyone?": The effect of relative increases in income on perceived income inequality

Abstract

Most research on income inequality implicitly assumes that a fixed percentage increase in income across all income levels does not alter income inequality. In contrast with this assumption, we show that relative increases in income lead to increased perceptions of inequality, even when buying power is held constant. In a second experiment, we extended these findings using a fictitious currency, thereby eliminating effects of using a familiar currency. In study 3, we demonstrate that feelings of envy and fairness are affected by a fixed percentage income increase.

 

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http://dx.doi.org/10.1016/j.joep.2014.04.008

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Journal of Economic Psychology

Research in Economic Psychology and Behavioral Economics.The Journal aims to present research that will improve understanding of behavioral, especially socio- psychological, aspects of economic phenomena and processes.

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