Unfair inequality and the demand for redistribution

Income inequality is rising but there seems to be no clear-cut effect on redistribution preferences, which is inconsistent with expectations of individual utility maximization. To explain this puzzle, recent research focuses on other-regarding motives. This study follows prior theorization presuming that the effect of inequality is transmitted through normative value judgements, but argues that a central point has been neglected. Individuals support a certain level of inequality caused by differences in individual merit and it is primarily non-merit based inequality that affects redistribution preferences. This view is substantiated by assessing the effect of an inequality measure that aims to solely measure non-merit based inequality. Multilevel models using repeated cross-sections show that it can explain both within- and between-country variance in redistribution preferences and that it is a better predictor than previously used measures. This suggests that the socio-political consequences of inequality cannot be inferred directly from the level of inequality.