The Inequity Z: Income Fairness Perceptions in Europe across the Income Distribution

Abstract

Using data from the European Social Survey, we examine income fairness evaluations of 17,605 respondents from 28 countries. Respondents evaluated the fairness of their own incomes as well as the fairness of the incomes of the top and bottom income deciles in their countries. Depicted on a single graph, these income fairness evaluations take on a Z-shaped form, which we call the “inequity Z”. The inequity Z reveals an extensive level of consensus within each country regarding the degree of unfairness of top and bottom incomes. With rising income, respondents consistently judge their own incomes to be less unfair. Across countries, the gap in fairness ratings between top and bottom incomes rises with income inequality. Perceived underreward of bottom incomes is more pronounced in countries where bottom incomes are objectively lower. Thus, this visualization suggests that, when people are confronted with information about actual income levels, perceived inequity increases with inequality.

Scientific evidence shows that people accept certain levels of inequality, favoring equity over equality (Starmans, Sheskin, and Bloom 2017). But how much inequality is fair, and is unfair inequality related to objective inequality? The normative approach to answering this question estimates unfair inequality on the basis of justice principles, including equality of opportunity and freedom from poverty (Ahrens 2022; Hufe, Kanbur, and Peichl 2022). Instead, we take an empirical approach, using data from the European Social Survey (ESS), which asked individuals directly about the perceived fairness of their own and the bottom and top incomes in a number of countries.

We use data from round 9 of the ESS, fielded in 2019 in 29 European countries (ESS ERIC 2021). Respondents were asked to rate the fairness of their own gross incomes, as well as the fairness of earnings of the top and bottom gross income deciles of full-time employees in their countries on a scale ranging from extremely unfairly too low (−4) to extremely unfairly too high (+4). Importantly, respondents were informed about the absolute values of these top and bottom incomes ahead of the fairness evaluation. Our final sample includes only individuals currently employed or self-employed (n = 17,605). Additional details are available in the online supplement; a replication package is available at https://github.com/fabiankal/inequityZ.

Figure 1 depicts all three fairness evaluations by respondents’ gross incomes in a single graph, yielding a Z-shaped form that we call the “inequity Z.” The Z symbolizes the three main characteristics of the relationship between respondents’ fairness evaluations and income: widespread agreement across different income groups that (1) bottom incomes are too low and (2) top incomes are too high, as well as (3) a nearly linear increase in fairness ratings of own income with rising levels of income. Most astonishingly, different income groups not only agree on the direction of the unfairness but also on the degree of unfairness. This is particularly true for the degree to which bottom-income earners are perceived to be unfairly underpaid. Contrary to that, top incomes are evaluated slightly more just in higher income deciles in several countries, potentially revealing increasing levels of beliefs in meritocracy with rising levels of income.

Figure 1.

Average fairness evaluation of own gross income (red), the lower bound of the top income decile (black), and the upper bound of the bottom income decile (green) by country and respondents’ income positions. Respondents were informed about the absolute income levels of the top and bottom gross income deciles of full-time employees in their countries and could evaluate the respective incomes on a 9-point rating scale ranging from extremely unfairly too low (−4) to extremely unfairly too high (+4). Individual-level poststratification and design weights provided by the European Social Survey are applied throughout the analyses. Countries are categorized into six groups depending on the level of inequality as measured by the P90/P10 income ratio of full-time employees (right axis). Within each inequality group, countries are sorted by the dollar-equivalized purchasing power of the bottom income decile of full-time employees (top axis).

Although the Z shape can be replicated in every country in the ESS, the spread of the Z differs among countries: in more equal countries, the fairness gap between top- and bottom-income fairness ratings is smaller as both, on average, approach the level of absolute fairness (Pearson’s correlation = .57, p = .002). In countries where the bottom income decile has comparatively low purchasing power (i.e., where relative poverty approaches absolute poverty), bottom-income earners are evaluated as more underrewarded compared with countries where the purchasing power of low incomes is higher (Pearson’s correlation = .82, p < .001).

Previous research suggests that the link between inequity and inequality might be weak because meritocratic beliefs tend to increase with inequality (Heiserman and Simpson 2017; Mijs 2021) and because fairness assessments are anchored in the status quo (Trump 2018). We find that despite these mechanisms, respondents’ fairness evaluations still change with the amount of inequality and poverty in their countries. Thus, when confronted with information about actual income levels, perceived inequity increases with inequality. Moreover, respondents with very diverse personal incomes largely agree that bottom incomes are much too low and top incomes are slightly too high. Thus, different income classes provide astonishingly similar fairness assessments of bottom and top incomes in many European countries.

Supplemental Material

sj-docx-1-srd-10.1177_23780231231167138 – Supplemental material for The Inequity Z: Income Fairness Perceptions in Europe across the Income Distribution

Supplemental material, sj-docx-1-srd-10.1177_23780231231167138 for The Inequity Z: Income Fairness Perceptions in Europe across the Income Distribution by Fabian Kalleitner and Sandra Bohmann in Socius