An optimal weighting scheme for a synthetic index of perception of inequality

Abstract This study develops a composite index of perceptions of inequality (PI) in two domains: inequality of opportunity and inequality of outcome. Using International Social Survey Programme (ISSP) data for 24 OECD countries, we recover patterns in public views on inequality and derive an optimally weighted PI score within a latent-variable framework. The index aggregates multiple indicators of societal and economic inequality, explicitly addressing multidimensionality and the unobservability of PI. It enables consistent comparisons across groups and over time, revealing context-invariant perceptions in the outcome domain but multidimensional perceptions in the opportunity domain. We validate the score against objective indicators such as the Gini coefficient and intergenerational mobility indices and document systematic differences in PI across demographic and socioeconomic groups. The index provides a compact tool for analysing public perceptions of inequality and their drivers, with applications to policy evaluation and social research.