Income disparity, perceptions of inequality, and public tolerance

Abstract

In the process of rapid transition, high income inequality and high public tolerance for inequality coexist in China. This phenomenon and its empirical and theoretical conundrum require exploration and explanation. With data from the 2013 Chinese General Social Survey, this article identifies and tests two forms of income inequality and their impacts on public tolerance. Analytical results of the mediating effect of “social context–subject perception” suggest that objective income inequality and perceived inequality have different effects on public tolerance. The statistical data consistently show that objective income inequality has no direct impact on public tolerance. But the larger the perceived inequality, the less it is tolerated. Meanwhile, actual big disparities are not accurately perceived by individuals. The existence of “perception bias” and contextual segmentation effects makes it easier for individuals to “capture” income disparity at the district and county level rather than at the provincial level, and at the current time rather than in the past. The misperception of objective inequality manifests differently among subgroups. Women and urban residents, as well as groups of medium education level, high income, and a high degree of access to information, are often more sensitive to income inequality. There is also an inverted U-shaped relationship between age and perceived income inequality. The results point to the heterogeneous effects of distribution structure and localization of individual perceptions as the key to explaining the paradox between high income inequality and high public tolerance of inequality. In other words, it is due to status-structure constraints and temporal-spatial conditions that the majority of citizens see the current income disparity as being within its tolerable limits. The implication of this study is that one should not take the public tolerance of the status quo lightly but make greater effort to optimize the localized income distribution structure.