Income inequalities: axioms of income inequality measures and people's perceptions

Abstract

Studies show that people perceive income inequality differently than most popular income inequality measures and axioms (postulated properties of inequality) indicate. This article synthesizes and reviews different results on income inequality perception. It presents basic income inequality axioms and analyses the level of support found in multiple studies. The paper shows that while answers to particular questions seldom perfectly agree with income inequality measures, the general pattern of respondents' answers is strongly correlated with these measures. It also argues that the observed differences can be partially explained by following Amartya Sen’s suggestion that income inequality is a multidimensional concept (1973, p. 48).