PERCEPTIONAL INEQUALITY AND PREFERENTIAL JUDGMENTS - AN EMPIRICAL-EXAMINATION OF DISTRIBUTIONAL AXIOMS

There are two categories of income distribution evaluations: first, th e more-or-less ''value-free'' perception of income inequality as a sta tistical dispersion; and second, the valuation of income distributions according to an explicit social welfare function which is meant to ca pture all of society's value judgements. These societal value judgemen ts can be expressed in the form of preferences. Whereas the inequality perception of income distributions appeals to an observer's sober jud gement, the revelation of preferences with respect to specific income distributions appeals to his or her sentiments. This paper is an empir ical analysis which investigates the juxtaposition of preferences with respect to income distributions and corresponding perceptions of dist ributional inequality. We do this through a questionnaire in which att itudes towards various distributional axioms are tested. The source of our data is 1773 completed questionnaires collected from five German universities. Based on our data, we observe that individuals' preferen ce orderings over the set of income distributions substantially deviat e from their perceptions of distributional inequality. In fact, our te st responses showed that even when some income distribution is judged to be more unequal than another, that distribution might be preferred, as it accords higher incomes to each individual. We hold that the pre ference for these greater incomes expresses a compensation for the inc reased degree of inequality. This explanation applies both to equiprop ortional and to equal fixed-sum increases in incomes, which implies a support of Paretian ethics.