Relative Income Misperceptions: Cross-Country Patterns in Europe

We study voters' relative income misperceptions among over 19,000 respondents across all 27 countries of the European Union. To our knowledge, ours is the largest such study to date. We document that voter income misperceptions are widespread and share key characteristics across EU countries, with most respondents misperceiving their relative income by more than one decile. The pattern reflects a "middle class bias," with more (less) affluent respondents more often displaying a negative (positive) bias. Further, average misperceptions are negative in all EU countries. At the country level, average misperceptions decrease with GDP per capita. At the individual level, older, more educated and urban residents exhibit less bias. We further implement a randomized information treatment informing respondents of their household's actual relative income. While our results indicate that misperceptions exist and exhibit similar patterns and correlations across the EU, the treatment effects are more dispersed. In some countries, people who learn they are wealthier than previously thought decrease their demand for redistribution, while in others they do not change or want more redistribution.