The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment

Ricardo Perez-Truglia

American Economic Review, 2020, vol. 110, issue 4, 1019-54

Abstract: In 2001, Norwegian tax records became easily accessible online, allowing everyone in the country to observe the incomes of everyone else. According to the income comparisons model, this change in transparency can widen the gap in well-being between richer and poorer individuals. Using survey data from 1985–2013 and multiple identification strategies, we show that the higher transparency increased the gap in happiness between richer and poorer individuals by 29 percent, and it increased the life satisfaction gap by 21 percent. We provide back-of-the-envelope estimates of the importance of income comparisons, and discuss implications for the ongoing debate on transparency policies.

JEL-codes: D31 H24 I31 K34 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (65)

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Working Paper: The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment (2019)
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DOI: 10.1257/aer.20160256

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