Decreasing Incomes Increase Selfishness

Nickolas Gagnon, Riccardo D. Saulle and Henrik W. Zaunbrecher

No 317127, FEEM Working Papers from Fondazione Eni Enrico Mattei (FEEM)

Abstract: We use a controlled laboratory experiment to study the causal impact of income de-creases within a time period on redistribution decisions at the end of that period, in an environment where we keep fixed the sum of incomes over the period. First, we inves-tigate the effect of a negative income trend (intra-personal decrease), which means a decreasing income compared to one’s recent past. Second, we investigate the effect of a negative income trend relative to the income trend of another person (inter-personal decrease). If intra-personal or inter-personal decreases create dissatisfaction for an individual, that person may become more selfish to obtain compensation. We formal-ize both effects in a multi-period model augmenting a standard model of inequality aversion. Overall, conditional on exhibiting sufficiently-strong social preferences, we find that individuals indeed behave more selfishly when they experience decreasing in-comes. While many studies examine the effect of income inequality on redistribution decisions, we delve into the history behind one’s income to isolate the effect of income changes.

Keywords: Institutional and Behavioral Economics; Labor and Human Capital (search for similar items in EconPapers)
Pages: 63
Date: 2021-12-22
New Economics Papers: this item is included in nep-exp
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Decreasing Incomes Increase Selfishness (2021)
Working Paper: Decreasing Incomes Increase Selfishness (2021)
Working Paper: Decreasing Incomes Increase Selfishness (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:feemwp:317127

DOI: 10.22004/ag.econ.317127

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