Decreasing Incomes Increase Selfishness

Nickolas Gagnon, Riccardo D. Saulle and Henrik W. Zaunbrecher
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Riccardo D. Saulle: University of Padova
Henrik W. Zaunbrecher: Maastricht University

No 2021.33, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We use a controlled laboratory experiment to study the causal impact of income decreases 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 investigate 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 formalize 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 incomes. 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: Income Inequality; Income Change; Social Preferences; Social Comparison; Income Redistribution (search for similar items in EconPapers)
JEL-codes: C91 D31 D63 (search for similar items in EconPapers)
Date: 2021-12
New Economics Papers: this item is included in nep-cbe and nep-exp
References: View references in EconPapers View complete reference list from CitEc
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:fem:femwpa:2021.33

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