Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/243369 
Year of Publication: 
2021
Series/Report no.: 
WIDER Working Paper No. 2021/43
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
In this review, I provide an overview of the literature investigating the social psychology of economic inequality, focusing on individuals' understandings, perceptions, and reactions to inequality. I begin by describing different ways of measuring perceptions of inequality, and conclude that absolute measures-which ask respondents to estimate inequality in more concrete terms-tend to be more useful and accurate than relative measures. I then describe how people understand inequality, highlighting the roles of cognitive heuristics, accessibility of information, self-interest, and context and culture. I review the evidence regarding how people react to inequality, suggesting that inequality is associated with higher well-being in developing nations but lower well-being in developed nations, mostly because of hopes or fears for the future. The evidence from developed nations suggests that inequality increases individuals' concerns about status and economic resources, increases their perception that the social world is competitive and individualistic, and erodes their faith in others, political systems, and democracy in general.
Subjects: 
inequality
perceptions of inequality
economic inequality
reactions to inequality
measuring perceptions of inequality
JEL: 
D91
Persistent Identifier of the first edition: 
ISBN: 
978-92-9256-981-5
Document Type: 
Working Paper

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