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Richer (and Holier) Than Thou? The Effect of Relative Income Improvements on Demand for Redistribution

Author

Listed:
  • Mounir Karadja

    (Department of Economics, Uppsala University)

  • Johanna Mollerstrom

    (Humboldt University and German Institute for Economic Research (DIW), Berlin, and Research Institute of Industrial Economics, Stockholm)

  • David Seim

    (Department of Economics, Stockholm University, CEPR, and Research Institute of Industrial Economics, Stockholm)

Abstract

We use a tailor-made survey on a Swedish sample to investigate how individuals' relative income affects their demand for redistribution. We first document that a majority misperceive their position in the income distribution and believe that they are poorer, relative to others, than they actually are. We then inform a subsample about their true relative income and find that individuals who are richer than they initially thought demand less redistribution. This result is driven by individuals with prior right-of-center political preferences who view taxes as distortive and believe that effort, rather than luck, drives individual economic success.

Suggested Citation

  • Mounir Karadja & Johanna Mollerstrom & David Seim, 2017. "Richer (and Holier) Than Thou? The Effect of Relative Income Improvements on Demand for Redistribution," The Review of Economics and Statistics, MIT Press, vol. 99(2), pages 201-212, May.
  • Handle: RePEc:tpr:restat:v:99:y:2017:i:2:p:201-212
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    Cited by:

    1. Lergetporer, Philipp & Werner, Katharina & Woessmann, Ludger, 2018. "Educational Inequality and Public Policy Preferences: Evidence from Representative Survey Experiments," IZA Discussion Papers 11730, Institute for the Study of Labor (IZA).
    2. Carina Engelhardt & Andreas Wagener, 2016. "What do Germans think and know about income inequality? A survey experiment," Working Papers 389, ECINEQ, Society for the Study of Economic Inequality.
    3. Berggren, Niclas & Nilsson, Therese, 2016. "Tolerance in the United States: Does economic freedom transform racial, religious, political and sexual attitudes?," European Journal of Political Economy, Elsevier, vol. 45(S), pages 53-70.
    4. Sera Linardi & Nita Rudra, 2015. "Globalization and Redistribution Towards the Poor in Developing Countries: Experimental Evidence from India," Artefactual Field Experiments 00399, The Field Experiments Website.
    5. Alesina, Alberto F & Miano, Armando & Stantcheva, Stefanie, 2018. "Immigration and Redistribution," CEPR Discussion Papers 13035, C.E.P.R. Discussion Papers.
    6. Christopher Roth & Johannes Wohlfart, 2016. "Experienced Inequality and Preferences for Redistribution," CESifo Working Paper Series 6251, CESifo Group Munich.
    7. repec:eee:pubeco:v:153:y:2017:i:c:p:49-55 is not listed on IDEAS
    8. Simixhiu, Amantia & Ziegler, Andreas, 2018. "On the relevance of income and behavioral factors for absolute and relative donations: A framed field experiment," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181600, Verein für Socialpolitik / German Economic Association.
    9. repec:aea:aecrev:v:108:y:2018:i:2:p:521-54 is not listed on IDEAS
    10. Elisabeth Bublitz, 2017. "Misperceptions of income distributions: Cross-country evidence from a randomized survey experiment," LIS Working papers 694, LIS Cross-National Data Center in Luxembourg.
    11. Bublitz, Elisabeth, 2016. "Misperceptions of income distributions: Cross-country evidence from a randomized survey experiment," HWWI Research Papers 178, Hamburg Institute of International Economics (HWWI).
    12. repec:eee:intell:v:69:y:2018:i:c:p:169-175 is not listed on IDEAS
    13. Grigorieff, Alexis & Roth, Christopher & Ubfal, Diego, 2016. "Does Information Change Attitudes Towards Immigrants? Representative Evidence from Survey Experiments," IZA Discussion Papers 10419, Institute for the Study of Labor (IZA).
    14. repec:eee:pubeco:v:167:y:2018:i:c:p:251-262 is not listed on IDEAS
    15. Nicolas L. Bottan & Ricardo Perez-Truglia, 2017. "Choosing Your Pond: Location Choices and Relative Income," NBER Working Papers 23615, National Bureau of Economic Research, Inc.
    16. Yamamura, Eiji & Ishida, Ryo, 2017. "Analysis of the implementation of information disclosure ordinances in Japan: the effect on the income of mayors and chief executives in local governments," MPRA Paper 83337, University Library of Munich, Germany.
    17. Jacob Gerner Hariri & Christian Bjørnskov & Mogens K. Justesen, 2016. "Economic Shocks and Subjective Well-Being: Evidence from a Quasi-Experiment," World Bank Economic Review, World Bank Group, vol. 30(1), pages 55-77.
    18. Ilpo Kauppinen & Panu Poutvaara, 2019. "Preferences for Redistribution and International Migration," ifo Working Paper Series 283, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    19. repec:spr:soinre:v:140:y:2018:i:1:d:10.1007_s11205-017-1769-z is not listed on IDEAS

    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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