(Perceptions of) Inequality, Demand for Redistribution, and Group-Specific Public Goods :A Survey Experiment in India

This paper uses data from a survey of 116,061 households in India to study people’s beliefs aboutinequality and demand for redistribution. The findings show that a household’s beliefs about inequality, implied by theperception of their position on the income distribution, is negatively correlated with support for reducing inequality.This is relevant since there are significant differences between where individuals believe their household stands andtheir actual position, with the gap between perceived and actual position exceeding two deciles on average. Despitethese large differences, informing individuals of their household’s position on the income distribution has nodiscernible effect on support for reducing inequality. The paper posits that demand for redistribution may beunresponsive to this information because it is based on exclusively on household’s income and does not account forthe sharing of resources within communities. In communitieswhere group-specific public goods, such as religious and social goods, are present, class antagonism andredistribution are mitigated by community solidarity. Households benefit from these goods, and such benefits alterthe individuals’ beliefs of inequality. Consistent with this prediction, the average individual perceives their householdas richer in districts with a greater supply of religious or social goods. The sharing of resources within religious orethnic groups can shape perceptions of the income distribution and reduce support for redistribution withinthese groups, and thus requires serious consideration in studies of inequality.