Dramatic underestimation of wage inequality
Most people dramatically underestimate wage inequality – such as the pay gap between CEOs and the average full-time worker. Most would prefer much lower levels of inequality than they believe exists, according to a survey across six high-income countries. In the US, CEOs earn 269 times more than the average full-time worker. People thought CEOs only earned 18 times as much, and they would prefer it to be just 5 times, Christopher Hoy, McKenzie Research Fellow at the University of Melbourne and on external leave from the World Bank, writes presenting the survey in a blog for London School of Economics and Political Science (LSE).
World Economic Forum’s annual gender gap report says global gender equality will take another 123 years. The global gender gap has since last year closed by 0.3-0.4 percentage points. In the technology, information and media industry, men are more highly represented at every career stage, especially in the STEM C-suite.
“When we presented respondents with accurate information about wage inequality, this led those on the far right to become much more supportive of redistribution, narrowing a lot of the gap with voters on the left”, Hoy writes.
“Our findings show that opposition to redistribution isn’t just based on values or ideology; misperceptions of reality also play a significant role. For most citizens, preferences stay consistent even when facts are presented. However, among far-right voters, correct information can significantly influence attitudes.”
“We find that far-right respondents did not alter their beliefs about meritocracy or their behaviour, such as their willingness to join a union. Rather, our findings appear to be driven by far-right respondents viewing the current level of wage inequality as so extreme – and perhaps unfair – that government intervention is necessary.”
“This matters because far-right parties, which are as popular as they have been in 80 years, often mobilize support around economic grievances while opposing redistributive policies. This leads many to believe that far-right voters’ preferences would not be influenced by correct information about wage inequality (indeed, our study includes a poll of 100 experts who predicted results in line with that sentiment). In fact, they turn out to be the most affected. As such, the political space for redistributive policies is larger than commonly believed.”
“For those concerned about rising polarisation and inequality, the message is cautiously optimistic: communication matters, even among groups often assumed to be unmoved by facts.
The survey comprises over 9,000 people in Australia, France, Japan, Sweden, the United Kingdom, and the United States.
“Across all six countries, people dramatically underestimated wage inequality. The most common misperception was underestimating the wage gap between the highest and the lowest earners”, Hoy writes.
According to the survey, nearly everyone preferred less wage dispersion.
“This strong desire for lower wage inequality exists across political lines. It appears that one of the few issues both the right and the left agree on is that the wages of the richest shouldn’t be so high!
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