Underestimation of Inequality in Japan

This Paper asks who within a polity underestimates inequality and what consequences does this underestimation have for politics. Previous studies show that people misperceive overall inequality or where their own income is in the income distribution. In Japan, there are more people who underestimate inequality than people who overestimate it. Why do Japanese underestimate inequality rather than overestimate it? I argue that people living in a relatively equal area are more likely to underestimate inequality than those living in a relatively unequal area. Furthermore, I demonstrate that underestimation changes electoral outcome by analyzing Japanese data. To reveal demographic and geographical differences in underestimation, I implement multilevel regression and poststratification (MRP) with individual level data collected by Japanese Electoral Study III and aggregate data at the prefectural level. The statistical analysis reveals three things. First, certain demographic and political factors affect the probability of underestimation at the individual level. A lower level of education and unemployment are associated with underestimation of inequality. Second, the degree of underestimation varies across prefectures in Japan. Even after controlling for the relevant demographic factors, prefectural differences persist. Relatively equal prefectures tend to have a higher proportion of people who underestimate inequality, which supports my argument that prefectural equality has a positive effect on underestimation. Lastly, underestimation of inequality affects electoral outcomes. Underestimation boosts the support for the governing parties in relatively unequal prefectures, but underestimation does harm to them in relatively equal prefectures. This study helps us understand the connection between economic inequality and political attitudes and behavior better.