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Income Perception, Information, and Progressive Taxation: Evidence from a Survey Experiment

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  • Fernández-Albertos, José
  • Kuo, Alexander

Abstract

Are individuals accurately informed about their place in the income distribution? Despite the importance of accurate information about one’s placement in the income distribution for many models of redistribution, this assumption remains untested. We present survey data and an embedded experiment where we inform some individuals their true place in the income distribution. We then assess the impact of such information on tax progressivity preferences. We find that individuals have considerable error regarding their self-placement in the income distribution. Revealing to individuals their true placement affects progressivity preferences for individuals who learn they are poor, and for individuals whose prior is that they are poor. These results have implications for information assumptions of redistribution models of comparative political economy and contribute to our understanding of tax preferences, an understudied dimension of redistribution preferences.

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  • Fernández-Albertos, José & Kuo, Alexander, 2018. "Income Perception, Information, and Progressive Taxation: Evidence from a Survey Experiment," Political Science Research and Methods, Cambridge University Press, vol. 6(1), pages 83-110, January.
    • Handle: RePEc:cup:pscirm:v:6:y:2018:i:01:p:83-110_00
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    Cited by:

    1. Gerard Domènech-Arumí, 2022. "Neighborhoods, Perceived Inequality, and Preferences for Redistribution :Evidence from Barcelona," Working Papers ECARES 2022-09, ULB -- Universite Libre de Bruxelles.
    2. Dietmar Fehr & Johanna Mollerstrom & Ricardo Perez-Truglia, 2022. "Your Place in the World: Relative Income and Global Inequality," American Economic Journal: Economic Policy, American Economic Association, vol. 14(4), pages 232-268, November.
    3. Kishishita, Daiki & Yamagishi, Atsushi & Matsumoto, Tomoko, 2023. "Overconfidence, income-ability gap, and preferences for income equality," European Journal of Political Economy, Elsevier, vol. 77(C).
    4. Gimpelson, V. & Chernina, E., 2020. "How we perceive our place in income distribution and how the perceptions deviate from reality," Journal of the New Economic Association, New Economic Association, vol. 46(2), pages 30-56.
    5. Xiaogeng Xu & Satu Metsälampi & Michael Kirchler & Kaisa Kotakorpi & Peter Hans Matthews & Topi Miettinen, 2023. "Which income comparisons matter to people, and how? Evidence from a large field experiment," Working Papers 10, Finnish Centre of Excellence in Tax Systems Research.
    6. Díez-Alonso, Daniel, 2020. "Taxpayer Bias in Perceived Income Distributions," MPRA Paper 116775, University Library of Munich, Germany, revised 10 Jan 2021.
    7. Hope, David & Limberg, Julian & Weber, Nina Sophie, 2021. "Why Do (Some) Ordinary Americans Support Tax Cuts for the Rich? Evidence From a Randomized Survey Experiment," SocArXiv chk9b, Center for Open Science.
    8. Campos-Vazquez, Raymundo M. & Krozer, Alice & Ramírez-Álvarez, Aurora A. & de la Torre, Rodolfo & Velez-Grajales, Roberto, 2022. "Perceptions of inequality and social mobility in Mexico," World Development, Elsevier, vol. 151(C).
    9. Matthias Fatke, 2018. "Inequality Perceptions, Preferences Conducive to Redistribution, and the Conditioning Role of Social Position," Societies, MDPI, vol. 8(4), pages 1-14, October.
    10. Ardanaz, Martín & Hübscher, Evelyne & Keefer, Philip & Sattler, Thomas, 2022. "Policy Misperceptions, Information, and the Demand for Redistributive Tax Reform: Experimental Evidence from Latin American Countries," IDB Publications (Working Papers) 12607, Inter-American Development Bank.
    11. Maurice Dunaiski & Janne Tukiainen, 2023. "Does income transparency affect support for redistribution? Evidence from Finland's tax day," Discussion Papers 159, Aboa Centre for Economics.
    12. Andrei Gheorghiță, 2023. "Understanding Public Support for the Flat-Rate Personal Income Tax in a Post-Communist Context: The Case of Romania," Sustainability, MDPI, vol. 15(9), pages 1-14, May.
    13. Nicolas Albacete & Pirmin Fessler & Peter Lindner, 2022. "The Wealth Distribution and Redistributive Preferences: Evidence from a Randomized Survey Experiment (Nicolás Albacete, Pirmin Fessler, Peter Lindner)," Working Papers 239, Oesterreichische Nationalbank (Austrian Central Bank).
    14. Leo Ahrens, 2020. "Unfair Inequality and the Demand for Redistribution," LIS Working papers 771, LIS Cross-National Data Center in Luxembourg.
    15. Bublitz, Elisabeth & Wang, Hequn & Jäger, Julian & Beblo, Miriam & Lohmann, Henning, 2022. "Perceived income positions and attitudes towards EU inequality: A cross-country survey experiment," WiSo-HH Working Paper Series 70, University of Hamburg, Faculty of Business, Economics and Social Sciences, WISO Research Laboratory.
    16. Xiaogeng Xu & Satu Metsälampi & Michael Kirchler & Kaisa Kotakorpi & Peter Hans Matthews & Topi Miettinen, 2023. "Which income comparisons matter to people, and how? Evidence from a large field experiment," Working Papers 2023-05, Faculty of Economics and Statistics, Universität Innsbruck.
    17. Hope, David & Limberg, Julian & Weber, Nina, 2023. "Why do (some) ordinary Americans support tax cuts for the rich? Evidence from a randomised survey experiment," European Journal of Political Economy, Elsevier, vol. 78(C).
    18. Demougin, Dominique & Upton, Harvey, 2023. "Relative income concerns and the Easterlin Paradox: A theoretical framework," Economic Modelling, Elsevier, vol. 127(C).
    19. Mu, Ren, 2022. "Perceived relative income, fairness, and the role of government: Evidence from a randomized survey experiment in China," China Economic Review, Elsevier, vol. 73(C).

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