Income-comparison Attitudes in the US and the UK: Evidence from Discrete-choice Experiments

Hitoshi Shigeoka and Katsunori Yamada

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: Economists have long been aware of utility externalities such as a tendency to compare own income with others'. If welfare losses from income comparisons are significant, any governmental interventions that alter such attitudes may have large welfare consequences. We conduct an original online survey of discrete-choice questions to estimate such attitudes in the US and the UK. We find that the UK respondents compare incomes more than US respondents do. We then manipulate our respondents with simple information to examine whether the attitudes can be altered. Our information treatment suggesting that comparing income with others may diminish welfare even when income levels increase makes UK respondents compare incomes more rather than less. Interestingly, US respondents are not affected at all. The mechanism behind the UK results seems to be that our treatment gives moral license to make income comparisons by providing information that others do so.

Date: 2015-03, Revised 2016-02
New Economics Papers: this item is included in nep-dcm and nep-upt
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Working Paper: Income-comparison Attitudes in the US and the UK: Evidence from Discrete-choice Experiments (2016)
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