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Biased Perceptions of Income Distribution and Preferences for Redistribution: Evidence from a Survey Experiment

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Author Info

  • Guillermo Cruces

    (CEDLAS,UNLP - CONICET - IZA)

  • Ricardo Pérez Truglia

    (Harvard University)

  • Martín Tetaz

    (CEDLAS,UNLP)

Abstract

Individual perceptions of income distribution play a vital role in political economy and public finance models, yet there is little evidence regarding their origins or accuracy. This study examines how individuals form these perceptions and explores their potential impact on preferences for redistribution. A tailored household survey provides original evidence on systematic biases in individuals’ evaluations of their own relative position in the income distribution. The study discusses one of the mechanisms that may generate such biases, based on the extrapolation of information from endogenous reference groups, and presents some suggestive evidence that this mechanism has significant explanatory power. The impact of these biased perceptions on attitudes toward redistributive policies is studied by means of an experimental design that was incorporated into the survey, which provided consistent information on the own-ranking within the income distribution to a randomly selected group of respondents. The evidence suggests that those who had overestimated their relative position and thought that they were relatively richer than they were tend to demand higher levels of redistribution when informed of their true ranking.

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File URL: http://cedlas.econo.unlp.edu.ar/archivos_upload/doc_cedlas138.pdf
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Bibliographic Info

Paper provided by CEDLAS, Universidad Nacional de La Plata in its series CEDLAS, Working Papers with number 0138.

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Length: 35 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:dls:wpaper:0138

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Postal: Calle 48 No555 - La Plata (1900)
Phone: 21- 1466
Fax: 54-21-25-9536
Web page: http://cedlas.econo.unlp.edu.ar/
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References

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  1. Benoît, Jean-Pierre & Dubra, Juan, 2007. "Overconfidence?," MPRA Paper 5505, University Library of Munich, Germany.
  2. Roland Bénabou & Jean Tirole, 2006. "Belief in a Just World and Redistributive Politics," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 699-746, May.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Biased Perceptions of Income Distribution and Preferences for Redistribution: Evidence from a Survey Experiment
    by maximorossi in NEP-LTV blog on 2011-05-27 18:13:19
  2. Información, percepciones, expectativas y resultados económicos (o de cómo el INDEC contribuye a reducir las demandas redistributivas)
    by Guillermo Cruces in Foco Económico on 2011-06-08 12:00:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. repec:aia:ginidp:dp38 is not listed on IDEAS
  2. Leonardo Becchetti & Stefano Castriota & Elena Giachin, 2010. "Beyond the Joneses: inter-country income comparisons and happiness," Econometica Working Papers wp25, Econometica.
  3. Ilyana Kuziemko & Michael I. Norton & Emmanuel Saez & Stefanie Stantcheva, 2013. "How Elastic Are Preferences for Redistribution? Evidence from Randomized Survey Experiments," NBER Working Papers 18865, National Bureau of Economic Research, Inc.
  4. Hajdu, Tamás & Hajdu, Gábor, 2014. "Reduction of income inequality and subjective well-being in Europe," Economics Discussion Papers 2014-22, Kiel Institute for the World Economy.
  5. Engelhardt, Carina & Wagener, Andreas, 2014. "Biased Perceptions of Income Inequality and Redistribution," Hannover Economic Papers (HEP) dp-526, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  6. Erik SCHOKKAERT & Tom TRUYTS, 2014. "Preferences for redistribution and social structure," Center for Economic Studies - Discussion papers ces14.01, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  7. Andrew Dabalen & Rasyad Parinduri & Saumik Paul, . "The Effects of the Intensity, Timing and Persistance of Personal History of Mobility on Support for Redistribution," Discussion Papers 13/10, University of Nottingham, CREDIT.
  8. Ada Ferrer-i-carbonell & Ramos, X. (Xavier), 2012. "GINI DP 38: Inequality and Happiness: A Survey," GINI Discussion Papers 38, AIAS, Amsterdam Institute for Advanced Labour Studies.
  9. Javier Olivera, 2014. "Preferences for redistribution after the economic crisis," Working Papers 334, ECINEQ, Society for the Study of Economic Inequality.
  10. Michael I. Norton & Dan Ariely, 2013. "American's desire for less wealth inequality does not depend on how you ask them," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(3), pages 393-394, May.
  11. Tamas Hajdu & Gabor Hajdu, 2013. "Are more equal societies happier? Subjective well-being, income inequality, and redistribution," IEHAS Discussion Papers 1320, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.

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