The Impact of Diversity on Perceptions of Income Distribution and Preferences for Redistribution

Abstract

Does socioeconomic diversity affect people’s perceptions of the income distribution and their preferences for redistribution? I exploit a financial aid reform that drastically raised the share of low-income students at an elite university in Colombia and leverage variation in exposure to low-income peers across cohorts and majors using difference-in-differences. Using original survey data and administrative records, I study how exposure to low-income peers affects high-income students’ social networks, perceptions, and preferences. The policy caused high-income students to interact more with low-income students, giving them more accurate perceptions of the income distribution and boosting their support for progressive redistribution.

Keywords: Redistributive Preferences, Socioeconomic Diversity

JEL Classification: D31, D63, H23, I22, I24, O15