Fair and Unfair Income Inequality

Cappelen, Alexander W.; Falch, Ranveig; Tungodden, Bertil

doi:10.1007/978-3-319-57365-6_130-1

Cited by 16 publications

(8 citation statements)

References 107 publications

(116 reference statements)

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“…Fisman et al (2020) study the joint preferences over income and wealth taxation using online surveys. Lab experiments using distribution games have also been used to disentangle the importance of various factors in shaping support for redistribution (for a recent review, see Cappelen, Falch and Tungodden (2020)).…”

Section: Introductionmentioning

confidence: 99%

Understanding Tax Policy: How do People Reason?

Stantcheva

2021

The Quarterly Journal of Economics

178

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I study how people understand, reason, and learn about two major tax policies: income taxation and estate taxation. Using large-scale Social Economics surveys issued to representative U.S. samples and associated experiments, I seek to elicit respondents’ factual knowledge about tax policy and the income or wealth distributions. Most importantly, I study their understanding of the mechanisms of tax policy and the reasoning that underlies their policy views. In decomposing policy views, I find that support for income and estate taxes is most strongly correlated with social preferences, i.e., the perceived benefits of redistribution and concerns around the fairness of inequality and taxation, as well as with broader views of the government. Efficiency concerns play a more minor role. These correlational patterns are confirmed by the experimental approach, which shows people instructional videos that explain the workings and consequences of one of the aspects of tax policy (the “Redistribution” and the “Efficiency” treatments) or that bring the two together and focus on the trade-off (the “Economist” treatment). The Redistribution and Economist treatments significantly increase support for more progressive income or estate taxes, while the Efficiency treatment has no effect. There are large partisan gaps in both the final policy views and at every step of the reasoning about the underlying mechanisms of taxes. Democrats’ and Republicans’ divergences in tax policy views can ultimately be traced back to different normative criteria (social preferences) and views of the government, rather than to different perceptions of the efficiency implications of taxation.

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Section: Introductionmentioning

confidence: 99%

Understanding Tax Policy: How do People Reason?

Stantcheva

2021

The Quarterly Journal of Economics

178

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“…This is typically revealed in studies where subjects are fully informed of the relevant fairness considerations-say, of agents' 'merit' of their allotted payoffs (e.g. Cappelen et al, 2013Cappelen et al, , 2020aAlmås et al, 2020). By contrast, a consumer informed of the income inequality across employees of the firm producing a good knows something about the inequality in pay, but not about merit.…”

Section: Related Literaturementioning

confidence: 99%

“…A well-established experimental finding is the interdependence in people's attitudes towards inequality and fairness (e.g. Almås et al, 2010;Cappelen et al, 2020b), with some inequalities being considered justified on grounds such as merit, desert or fairness (see also Fleurbaey, 2008). Though very large inequalities are seldom studied in this literature (Section 2), there could be inequality levels so high that a subject considers them unjustifiable no matter the underlying fairness-relevant considerations.…”

Section: Wtp and Political Leaningsmentioning

confidence: 99%

Are People Willing to Pay for Reduced Inequality?

Hill,

Lloyd

2024

Management Science

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Would consumers be willing to pay more for goods for which there is less inequality in wages across those involved in their production? In incentive-compatible behavioral choice studies on representative samples of the English and U.S. populations, we find significantly positive willingness to pay for such inequality reductions in more than 80% of subjects. Although it varies with political leaning and the extent of the inequality reduction, willingness to pay is positive across the political spectrum and for all studied inequality differences. It is higher for more intuitive and informative inequality-reporting formats. Our findings have policy implications for both governments and firms. On the one hand, they suggest the promise of universal provision of product-level inequality information as a tool for moderating income inequality. On the other hand, they highlight the potential relevance of inequality reporting for firms’ marketing strategies. This paper was accepted by Dorothea Kübler, behavioral economics and decision analysis. Funding: This work was supported by the Agence Nationale de la Recherche [LabEx Ecodec/ANR-11-LABX-0047] and the Fondation HEC [Budget F]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.01974 .

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“…Research on preferences for inequality suggests that individuals carefully dierentiate between fair and unfair inequalities (Cappelen et al, 2020(Cappelen et al, , 2014. If a society believes that socioeconomic success depends only on merit, and that everyone should fully enjoy the fruits of their work, this society will demand low redistribution.…”

Section: J O U R N a L P R E -P R O O Fmentioning

confidence: 99%