Inequality Without Upheaval: What shapes Icelanders' tolerance towards income differences?

Abstract

Increased benefits have, to a large extent, been limited to a small elite, while the majority have suffered stagnant or declining incomes, contributing to rising inequality. Despite the common belief that widening income disparity in society is too great, there is no indication of rising public concern over the issue, and inequality is even considered, to some extent, desirable. Research has suggested that three explanations may lie behind this paradox. Firstly, people have a strong propensity to perceive the dominant social order as default; as a result, their perceptions of the desirable income gap do not diverge significantly from their perceptions of the existing income disparity. Secondly, inequality benefits those who consider themselves to have a good social status. Thirdly, it may be that widespread meritocratic opportunity beliefs encourage people to consider that the status of individuals in society is largely earned, and therefore a significant difference in income is seen as fair and just. The validity of these explanations is assessed by looking at data from the Icelandic Social Science Survey (ISS) from the year 2020. The results clearly support the first explanation. Individuals consider a greater income gap to be desirable as they consider the actual income gap to be greater. The data provides little support for the third explanation. Little can be said about the relationship between tolerance for inequality and opportunity beliefs, except perhaps in the context of the importance of family wealth.