Richer (and Holier) than Thou? The Effect of Relative Income Improvements on Demand for Redistribution

Mounir Karadja, Johanna Mollerstrom () and David Seim
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Johanna Mollerstrom: Interdisciplinary Center for Economic Science and Department of Economics, George Mason University

No 1050, Working Papers from George Mason University, Interdisciplinary Center for Economic Science

Abstract: We study the extent to which people are misinformed about their relative position in the income distribution and the effects on preferences for redistribution of correcting faulty beliefs. We implement a tailor-made survey in Sweden and document that a vast majority of Swedes believe that they are poorer, relative to others, than they actually are. This is true across groups, but younger, poorer, less cognitively able and less educated individuals have perceptions that are further from reality. Using a second survey, we conduct an experiment by randomly informing a subsample about their true relative income position. Respondents who learn that they are richer than they thought demand less redistribution and increase their support for the Conservative Party. This result is entirely driven by prior right-of-center political preferences and not by altruism or moral values about redistribution. Moreover, the effect can be reconciled by people with political preferences to the right-of-center being more likely to view taxes as distortive and believe that it is personal effort rather than luck that is most influential for individual economic success. Length: 48

Keywords: fairness; responsibility; option luck; brute luck; experiment (search for similar items in EconPapers)
JEL-codes: C91 D63 D81 H23 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Richer (and Holier) Than Thou? The Effect of Relative Income Improvements on Demand for Redistribution (2017)
Working Paper: Richer (and Holier) Than Thou? The Effect of Relative Income Improvements on Demand for Redistribution (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:gms:wpaper:1050

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