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
Date Written: March 6, 2019
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: Suggested Citation