Knowing one’s place? The role of income inequality in shaping positioning bias across 29 countries

TL;DR

This study explores how income inequality affects people's perception of their income rank in 29 countries.

Contribution

The study reveals that income inequality influences positioning bias differently depending on individuals' actual income level.

Findings

High inequality increases accuracy in self-perception for disadvantaged individuals.

Higher-income individuals tend to underestimate their position under high inequality.

Overall, higher inequality is linked to lower subjective status relative to actual position.

Abstract

This study investigates how individuals’ misperceptions of their relative position in the income distribution—referred to as positioning bias—are shaped by income inequality. Drawing on the ISSP 2019 Social Inequality module, the analysis includes data from 31,368 individuals across 29 countries and employs multilevel modelling to test whether individuals are more likely to misperceive their position under conditions of high inequality. We explore heterogeneity across income groups and bias types (unbiased, underestimation, and overestimation). Findings reveal that inequality is associated with positioning bias, though the direction and magnitude depend on the individuals’ actual income position. Individuals in disadvantaged positions are more accurate in their self-perceptions when inequality is high, while those in higher-income positions tend more towards underestimating their relative standing. Overall, the results show that higher inequality is associated with lower subjective status relative to respondents’ actual position across all income groups. This research contributes to broader debates on inequality perceptions and redistributive preferences.

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