Redistribution and Beliefs about the Source of Income Inequality

60 Pages Posted: 8 Jun 2020 Last revised: 9 Jun 2020

Date Written: May 13, 2020

Abstract

Previous literature demonstrates that beliefs about the determinants of income inequality play a major role in individual support for income redistribution. This study investigates how people form beliefs regarding the extent to which work versus luck determines income inequality. Specifically, I examine whether people form self-serving beliefs to justify supporting personally advantageous redistributive policies. I use a laboratory experiment where I directly measure beliefs and manipulate the incentives to engage in self-deception. I first replicate earlier results demonstrating that (1) people attribute income inequality to work when they receive a high income and to luck when they receive a low income and (2) their beliefs about the source of income inequality influence their preferences over redistributive policies. However, I do not find that people’s beliefs about the causes of income inequality are further influenced by self-serving motivations based on a desire to justify favorable redistributive policies. I conclude that, in my experiment, self-serving beliefs about the causes of income inequality are driven primarily by overconfidence and self-image concerns and not to justify favorable redistributive policies.

Keywords: Redistribution, Fairness, (Motivated) Beliefs, Laboratory Experiments

JEL Classification: D31, D63, D64, D83, H23

Suggested Citation

Valero, Vanessa, Redistribution and Beliefs about the Source of Income Inequality (May 13, 2020). Available at SSRN: https://ssrn.com/abstract=3599835 or http://dx.doi.org/10.2139/ssrn.3599835

Vanessa Valero (Contact Author)

Loughborough University ( email )

Ashby Road
Nottingham NG1 4BU
Great Britain

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