Description:
This paper uses data from a survey of 116,061 households in India to study people's beliefs about inequality and demand for redistribution. The findings show that a household's beliefs about inequality, implied by the perception of their position on the income distribution, is negatively correlated with support for reducing inequality. This is relevant since there are significant differences between where individuals believe their household stands and their actual position, with the gap between perceived and actual position exceeding two deciles on average. Despite these large differences, informing individuals of their household's position on the income distribution has no discernible effect on support for reducing inequality. The paper posits that demand for redistribution may be unresponsive to this information because it is based on exclusively on household's income and does not account for the sharing of resources within communities. In communities where group-specific public goods, such as religious and social goods, are present, class antagonism and redistribution are mitigated by community solidarity. Households benefit from these goods, and such benefits alter the individuals' beliefs of inequality. Consistent with this prediction, the average individual perceives their household as richer in districts with a greater supply of religious or social goods. The sharing of resources within religious or ethnic groups can shape perceptions of the income distribution and reduce support for redistribution within these groups, and thus requires serious consideration in studies of inequality