Invisible Inequality Leads to Punishing the Poor and Rewarding the Rich

Citation: O. P. Hauser, G. Kraft-Todd, D. G. Rand, M. A. Nowak, M. I. Norton (2019). Invisible Inequality Leads to Punishing the Poor and Rewarding the Rich. Behavioural Public Policy, 1-21.

96 Pages Posted: 14 Oct 2017 Last revised: 7 May 2019

See all articles by Oliver Hauser

Oliver Hauser

University of Exeter Business School - Department of Economics; Harvard University

Gordon T. Kraft-Todd

Yale University, Faculty of Arts & Sciences, Department of Psychology

David G. Rand

Massachusetts Institute of Technology (MIT)

Martin Nowak

Harvard University

Michael I. Norton

Harvard Business School - Marketing Unit

Date Written: March 6, 2019

Abstract

Four experiments examine how lack of awareness of inequality affect behaviour towards the rich and poor. In Experiment 1, participants who became aware that wealthy individuals donated a smaller percentage of their income switched from rewarding the wealthy to rewarding the poor. In Experiments 2 and 3, participants who played a public goods game – and were assigned incomes reflective of the US income distribution either at random or on merit – punished the poor (for small absolute contributions) and rewarded the rich (for large absolute contributions) when incomes were unknown; when incomes were revealed, participants punished the rich (for their low percentage of income contributed) and rewarded the poor (for their high percentage of income contributed). In Experiment 4, participants provided with public education contributions for five New York school districts levied additional taxes on mostly poorer school districts when incomes were unknown, but targeted wealthier districts when incomes were revealed. These results shed light on how income transparency shapes preferences for equity and redistribution. We discuss implications for policy-makers.

Keywords: inequality; transparency; cooperation; public goods; punishment; reward; taxes; charity; donation

JEL Classification: H4; H41; H20

Suggested Citation

Hauser, Oliver and Kraft-Todd, Gordon T. and Rand, David G. and Nowak, Martin and Norton, Michael I., Invisible Inequality Leads to Punishing the Poor and Rewarding the Rich (March 6, 2019). Citation: O. P. Hauser, G. Kraft-Todd, D. G. Rand, M. A. Nowak, M. I. Norton (2019). Invisible Inequality Leads to Punishing the Poor and Rewarding the Rich. Behavioural Public Policy, 1-21.. Available at SSRN: https://ssrn.com/abstract=3051673 or http://dx.doi.org/10.2139/ssrn.3051673

Oliver Hauser (Contact Author)

University of Exeter Business School - Department of Economics ( email )

Streatham Court
Exeter, EX4 4RJ
United Kingdom

HOME PAGE: http://www.oliverhauser.org

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
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HOME PAGE: http://www.hauseroliver.com

Gordon T. Kraft-Todd

Yale University, Faculty of Arts & Sciences, Department of Psychology ( email )

P.O. Box 208205
New Haven, CT 06520-8205
United States

David G. Rand

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

HOME PAGE: http://www.daverand.org

Martin Nowak

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Michael I. Norton

Harvard Business School - Marketing Unit ( email )

Soldiers Field
Boston, MA 02163
United States

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