“Center bias” is lower in more unequal local contexts

• Local inequality shapes perceptions of people’s own position in income distribution • Contexts shape opportunities for upward and downward social comparison. • We match survey data with contextual data on local Gini coefficients and average income • The “center bias” is lower in more unequal municipalities We examine the relationship between local income inequality and people’s misperception that they are in the middle of the national income distribution (“center bias”). Local contexts shape perceptions of inequality by influencing the availability of opportunities for upward and downward social comparisons. Four mechanisms could link local inequality to perceptions of one’s relative income position: exposure versus segregation and contrast versus assimilation. We supplement geo-referenced survey data with context information and show that higher local inequality is associated with lower “center bias” (“exposure” mechanism). There is no clear evidence that respondents feel richer in richer contexts (“assimilation” mechanism).