Trickle-Down Economics, Merit, and Redistribution: An Experiment with the Poorest and Richest US Americans

Despite growing income inequality, demand for redistribution has remained stagnant, which is particularly puzzling for the poor. We investigate whether attitudes toward “trickle-down” economics and preferences for fairness affect demand for redistribution. We involve US residents in the bottom (N = 1, 200) and top (N = 1, 146) 20% of the income distribution in experimental redistributive decisions from high-income real-life entrepreneurs to low-income recipients. We find that entrepreneurs’ activities with potential for trickle-down, such as high employment or innovation rates, are largely irrelevant to redistribution. Philanthropic donations, however, reduce redistribution demand among the poor. The most important factor for redistribution is the desire to sanction the “undeserving poor” and, to a lesser extent, to reward the “deserving rich”, measured by daily working hours and the founding of the firm. Decisions by high-income and low-income participants generally follow the same patterns, are quantitatively similar, and are mediated by economic and political identity.