Redistributive Choices and Income Inequality: Experimental Evidence for Income as a Signal of Deservingness

35 Pages Posted: 12 Mar 2016 Last revised: 13 Sep 2016

Laura K. Gee

Tufts University; IZA

Marco Migueis

Federal Reserve Board

Sahar Parsa

Tufts University

Date Written: August 1, 2016

Abstract

In this paper, we contribute to the debate on the determinants of redistribution policies and provide evidence that the source of income – whether income is earned through work as opposed to determined by luck – does not only affect the level of redistribution, but also the relationship between inequality and preferences for redistribution. We use a lab experiment with a two-by-two design, varying both how income is attributed (luck versus performance) and the degree of income inequality. 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 implies that when income is earned through performance, individuals can use income differences and not only the income level as a heuristic to infer relative deservingness. Intuitively, 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.

Suggested Citation

Gee, Laura K. and Migueis, Marco and Parsa, Sahar, Redistributive Choices and Income Inequality: Experimental Evidence for Income as a Signal of Deservingness (August 1, 2016). Available at SSRN: https://ssrn.com/abstract=2746019

Laura Katherine Gee

Tufts University ( email )

Medford, MA 02155
United States

IZA

P.O. Box 7240
Bonn, D-53072
Germany

Marco Migueis (Contact Author)

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Sahar Parsa

Tufts University ( email )

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