Are People Willing to Pay for Reduced Inequality?

39 Pages Posted: 20 Oct 2020 Last revised: 21 Oct 2020

See all articles by Brian Hill

Brian Hill

HEC Paris - Economics & Decision Sciences; CNRS

Thomas Lloyd

HEC Paris (Groupe HEC), Students

Date Written: October 14, 2020

Abstract

In the face of rising income inequality (Acemoglu & Autor, 2011; Atkinson, Piketty, & Saez, 2011; Piketty, 2014; World Economic Forum, 2014), one recent proposal is to provide consumers with information about the income inequality across those involved in the production of each good, at the point of purchase. This has been shown to depress overall inequality (Hill, 2020), though its impact depends crucially on whether people are willing to pay more for goods whose production involves less income inequality. Here we investigate this largely unexplored empirical question through an incentivised, behavioural choice experiment on a representative sample of the English population. We find that a large majority are willing to pay significantly more for goods associated with less inequality. How much more people are willing to pay varies with political leaning and increases with the extent of the inequality reduction, but is positive across the political spectrum and for all studied inequality differences. Moreover, it is typically higher when inequality is reported in more intuitive and informa- tive formats. Our results bode well for the effectiveness of product-level inequality information provision as a tool for moderating income inequality, promising impacts even in markets where all goods involve relatively high inequality levels and potential participation across the political spectrum.

Keywords: Income inequality, inequality information provision, willingness to pay, inequality attitude, inequality reporting

JEL Classification: D63, D9, D3

Suggested Citation

Hill, Brian and Lloyd, Thomas, Are People Willing to Pay for Reduced Inequality? (October 14, 2020). HEC Paris Research Paper No. ECO/SCD-2020-1392, Available at SSRN: https://ssrn.com/abstract=3711785 or http://dx.doi.org/10.2139/ssrn.3711785

Brian Hill (Contact Author)

HEC Paris - Economics & Decision Sciences ( email )

Paris
France

CNRS ( email )

3, rue Michel-Ange
Paris, 75794
France

Thomas Lloyd

HEC Paris (Groupe HEC), Students ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex
France

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