Hostname: page-component-669899f699-cf6xr Total loading time: 0 Render date: 2025-04-25T22:34:38.137Z Has data issue: false hasContentIssue false
  • English
  • Français

Redistributive choices and increasing income inequality: experimental evidence for income as a signal of deservingness

Published online by Cambridge University Press:  14 March 2025

Laura K. Gee ,
Marco Migueis  and
Sahar Parsa
Laura K. Gee
Affiliation:
Tufts University, Medford, USA
Marco Migueis*
Affiliation:
Federal Reserve Board, Washington DC, USA
Sahar Parsa
Affiliation:
Tufts University, Medford, USA
*
[email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

We explore the relation between redistribution choices, source of income, and pre-redistribution inequality. Previous studies find that when income is earned through work there is less support for redistribution than when income is determined by luck. Using a lab experiment, we vary both the income-generating process (luck vs. performance) and the level of inequality (low vs. high). We find that an increase in inequality has less impact on redistribution choices when income is earned through performance than when income results from luck. This result is likely explained by individuals using income differences as a heuristic to infer relative deservingness. If people believe income inequality increases as a result of performance rather than luck, then they are likely to believe the poor deserve to stay poor and the rich deserve to stay rich.

Keywords

Income redistributionFairnessExperimental economics
Type
Original Paper
Information
Experimental Economics , Volume 20 , Issue 4 , December 2017 , pp. 894 - 923
Copyright
Copyright © 2017 Economic Science Association

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

Footnotes

Electronic supplementary material The online version of this article (doi:https://doi.org/10.1007/s10683-017-9516-5) contains supplementary material, which is available to authorized users.

The opinions expressed in this manuscript belong to the authors and do not represent official positions of the Federal Reserve Board or the Federal Reserve System. We would like to thank Mariana Blanco for her kind assistance with this paper. In addition, we thank Christopher Anderson, Darcy Covert, Xinxin Lyu, Mike Manzi, Maria Morales-Loaiza, Eitan Scheinthal, Tom Tagliaferro, Isabelle Vrod, Kenneth Weitzman, and Qinyue Yu for excellent research assistance. Finally, we thank the editors, two anonymous referees, Kelsey Jack, Pablo Querubin, Debraj Ray, and Gregory DeAngelo for their helpful comments and suggestions. This research was supported in part by funds from the Tufts University Faculty Research Awards Committee.

References

Agranov, M, & Palfrey, TR (2015). Equilibrium tax rates and income redistribution: A laboratory study. Journal of Public Economics, 130, 45–58. 10.1016/j.jpubeco.2015.08.008CrossRefGoogle Scholar
Alesina, A., & Angeletos, G.-M. (2005). Fairness and redistribution: US versus Europe. American Economic Review. 95.CrossRefGoogle Scholar
Alesina, A, & Glaeser, EL (2004). Fighting poverty in the US and Europe: A world of difference, Oxford: Oxford University Press 10.1093/0199267669.001.0001CrossRefGoogle Scholar
Arrow, KJ (1998). What has economics to say about racial discrimination?. The Journal of Economic Perspectives, 12(2), 91–100. 10.1257/jep.12.2.91CrossRefGoogle Scholar
Balafoutas, L, Kocher, MG, Putterman, L, & Sutter, M (2013). Equality, equity and incentives: An experiment. European Economic Review, 60, 32–51. 10.1016/j.euroecorev.2013.01.005CrossRefGoogle Scholar
Bertola, G., & Ichino, A. (1995). Wage inequality and unemployment: United States versus Europe. In NBER Macroeconomics Annual 1995, Volume 10, pp. 13–66. MIT Press.Google Scholar
Bertrand, M, & Mullainathan, S (2004). Are Emily and Greg more employable than Lakisha and Jamal? A field experiment on labor market discrimination. The American Economic Review, 94(4), 991–1013. 10.1257/0002828042002561CrossRefGoogle Scholar
Cabrales, A, Nagel, R, & Mora, JVR (2012). It is Hobbes, not Rousseau: An experiment on voting and redistribution. Experimental Economics, 15(2), 278–308. 10.1007/s10683-011-9300-xCrossRefGoogle Scholar
Cappelen, AW, Hole, AD, Sørensen, EØ, & Tungodden, B (2007). The pluralism of fairness ideals: An experimental approach. The American Economic Review, 97(3), 818–827. 10.1257/aer.97.3.818CrossRefGoogle Scholar
Cherry, TL, Frykblom, P, & Shogren, JF (2002). Hardnose the dictator. The American Economic Review, 92, 1218–1221. 10.1257/00028280260344740CrossRefGoogle Scholar
Cox, JC, Friedman, D, & Gjerstad, S (2007). A tractable model of reciprocity and fairness. Games and Economic Behavior, 59(1), 17–45. 10.1016/j.geb.2006.05.001CrossRefGoogle Scholar
Dasgupta, U (2011). Do procedures matter in fairness allocations? Experimental evidence in mixed gender pairings. Economics Bulletin, 31(1), 820–829.Google Scholar
De Araujo, F. A., Carbone, E., Conell-Price, L., Dunietz, M. W., Jaroszewicz, A., Landsman, R., Lamé, D., Vesterlund, L., Wang, S., & Wilson, A. J. (2015). The effect of incentives of real effort: Evidence from the slider task.CrossRefGoogle Scholar
de Oliveira, ACM, Eckel, C, & Croson, RTA (2012). The stability of social preferences in a low-income neighborhood. Southern Economic Journal, 79(1), 15–45. 10.4284/0038-4038-79.1.15CrossRefGoogle Scholar
Downs, A (1957). An economic theory of democracy. Journal of Political Economy, 65, 135–150. 10.1086/257897CrossRefGoogle Scholar
Durante, R, Putterman, L, & Weele, J (2014). Preferences for redistribution and perception of fairness: An experimental study. Journal of the European Economic Association, 12(4), 1059–1086. 10.1111/jeea.12082CrossRefGoogle Scholar
Erkal, N, Gangadharan, L, & Nikiforakis, N (2011). Relative earnings and giving in a real-effort experiment. The American Economic Review, 101, 3330–3348. 10.1257/aer.101.7.3330CrossRefGoogle Scholar
Esarey, J, Salmon, TC, & Barrilleaux, C (2012). What motivates political preferences? Self-interest, ideology, and fairness in a laboratory democracy. Economic Inquiry, 50(3), 604–624. 10.1111/j.1465-7295.2011.00394.xCrossRefGoogle Scholar
Fahr, R, & Irlenbusch, B (2000). Fairness as a constraint on trust in reciprocity: Earned property rights in a reciprocal exchange experiment. Economics Letters, 66(3), 275–282. 10.1016/S0165-1765(99)00236-0CrossRefGoogle Scholar
Gill, D., & Prowse, V. L. (2011). A novel computerized real effort task based on sliders. Available at SSRN 1732324.Google Scholar
Guvenen, F., Kuruscu, B., & Ozkan, S. (2013). Taxation of human capital and wage inequality: A cross-country analysis*. The Review of Economic Studies.Google Scholar
Hoffman, E, McCabe, K, Shachat, K, & Smith, V (1994). Preferences, property rights, and anonymity in bargaining games. Games and Economic Behavior, 7(3), 346–380. 10.1006/game.1994.1056CrossRefGoogle Scholar
Hotelling, H (1929). Stability in competition. The Economic Journal, 39(153), 41–57. 10.2307/2224214CrossRefGoogle Scholar
Iversen, T, & Soskice, D (2006). Electoral institutions and the politics of coalitions: Why some democracies redistribute more than others. American Political Science Review, 100(02), 165–181. 10.1017/S0003055406062083CrossRefGoogle Scholar
Krawczyk, M (2010). A glimpse through the veil of ignorance: Equality of opportunity and support for redistribution. Journal of Public Economics, 94(1), 131–141. 10.1016/j.jpubeco.2009.10.003CrossRefGoogle Scholar
Ku, H, & Salmon, TC (2013). Procedural fairness and the tolerance for income inequality. European Economic Review, 64, 111–128. 10.1016/j.euroecorev.2013.09.001CrossRefGoogle Scholar
Lefgren, LJ, Sims, DP, & Stoddard, OB (2016). Effort, luck, and voting for redistribution. Journal of Public Economics, 143, 89–97. 10.1016/j.jpubeco.2016.08.012CrossRefGoogle Scholar
McCoy, SK, & Major, B (2007). Priming meritocracy and the psychological justification of inequality. Journal of Experimental Social Psychology, 43(3), 341–351. 10.1016/j.jesp.2006.04.009CrossRefGoogle Scholar
Meltzer, AH, & Richard, SF (1981). A rational theory of the size of government. The Journal of Political Economy, 89, 914–927. 10.1086/261013CrossRefGoogle Scholar
Milanovic, B (2000). The median-voter hypothesis, income inequality, and income redistribution: An empirical test with the required data. European Journal of Political Economy, 16(3), 367–410. 10.1016/S0176-2680(00)00014-8CrossRefGoogle Scholar
Oxoby, RJ, & Spraggon, J (2008). Mine and yours: Property rights in dictator games. Journal of Economic Behavior & Organization, 65(3), 703–713. 10.1016/j.jebo.2005.12.006CrossRefGoogle Scholar
Phelps, ES (1972). The statistical theory of racism and sexism. The American Economic Review, 62(4), 659–661.Google Scholar
Rey-Biel, P., Sheremeta, R. M., & Uler, N. (2015). When income depends on performance and luck: The effects of culture and information on giving. Available at SSRN 2617382.CrossRefGoogle Scholar
Ruffle, BJ (1998). More is better, but fair is fair: Tipping in dictator and ultimatum games. Games and Economic Behavior, 23(2), 247–265. 10.1006/game.1997.0630CrossRefGoogle Scholar
Rutström, EE, & Williams, MB (2000). Entitlements and fairness: An experimental study of distributive preferences. Journal of Economic Behavior & Organization, 43(1), 75–89. 10.1016/S0167-2681(00)00109-8CrossRefGoogle Scholar
Sandmo, A. (1983). Progressive taxation, redistribution, and labor supply. The Scandinavian Journal of Economics, 311–323.CrossRefGoogle Scholar
Steven Beckman, R., Gregory DeAngelo, W. J. S., & Wang, N. (2014). Is the veil of ignorance gender-neutral? Reference dependence and sexual selection in decisions toward risk and inequality. Working paper.Google Scholar
Tirole, J, & Bénabou, R (2006). Belief in just world and redistributive politics. The Quarterly Journal of Economics, 121(2), 699–746. 10.1162/qjec.2006.121.2.699Google Scholar
Tyran, J-R, & Sausgruber, R (2006). A little fairness may induce a lot of redistribution in democracy. European Economic Review, 50(2), 469–485. 10.1016/j.euroecorev.2004.09.014CrossRefGoogle Scholar
Supplementary material: File

Gee et al. supplementary material

Performance-High Treatment (with Beliefs Elicitation)
Download Gee et al. supplementary material(File)
File 783.7 KB