The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment

Pérez-Truglia, Ricardo

doi:10.3386/w25622

Cited by 45 publications

(44 citation statements)

References 39 publications

(112 reference statements)

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“…At the same time, media that publicize data about actual incomes might reduce misperceptions. In Norway, after newspapers created websites on which citizens could learn each others' salaries, perceptions of relative income became more accurate and attitudes towards redistribution changed accordingly (Perez‐Truglia, ). Besides media effects, greater travel—domestic and international—could broaden the reference group.…”

Section: Resultsmentioning

confidence: 99%

Misperceiving inequality

Gimpelson

Treisman

2017

Economics & Politics

402

209

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A vast literature suggests that economic inequality has important consequences for politics and public policy. Higher inequality is thought to increase demand for income redistribution in democracies and to discourage democratization and promote class conflict and revolution in dictatorships. Most such arguments crucially assume that ordinary people know how high inequality is, how it has been changing, and where they fit in the income distribution. Using a variety of large, cross‐national surveys, we show that, in recent years, ordinary people have had little idea about such things. What they think they know is often wrong. Widespread ignorance and misperceptions emerge robustly, regardless of data source, operationalization, and measurement method. Moreover, perceived inequality—not the actual level—correlates strongly with demand for redistribution and reported conflict between rich and poor. We suggest that most theories about political effects of inequality need to be reframed as theories about effects of perceived inequality.

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Section: Resultsmentioning

confidence: 99%

Misperceiving inequality

Gimpelson

Treisman

2017

Economics & Politics

402

209

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“…These findings proved consistent with models of social preferences among peers (Frank, 1984;Romer, 1984;Summers, 1988;Lazear, 1989;Akerlof and Yellen, 1990). More recently, other studies have documented effects of pay inequality and pay transparency using natural experiments (Mas, 2017;Perez-Truglia, 2019;Dube, Giuliano, and Leonard, 2019), field experiments (Cohn, Fehr, Herrmann, and Schneider, 2014;Cullen and Pakzad-Hurson, 2016;Breza, Kaur, and Shamdasani, 2018), and laboratory experiments (Bracha, Gneezy, and Loewenstein, 2015;Huet-Vaughn, 2017).…”

Section: Introductionmentioning

confidence: 99%

How Much Does Your Boss Make? The Effects of Salary Comparisons

Cullen¹,

Pérez-Truglia²

2018

Self Cite

102

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Experimental Economics Conference, BEAM, Advances with Field Experiments and the AEA Annual Meetings. The collaborating institution provided financial support for the research being conducted. Additionally, Zoe Cullen was a full-time, salaried employee at that institution while the research was being conducted. This project was reviewed and approved by the Institutional Review Board at University of California Los Angeles (IRB#17-001529).The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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“…First, it relates to literature on the importance of relative income for subjective well-being. Since the seminal contribution by Easterlin (1974), several studies have argued that subjective well-being depends on relative, rather than absolute, income (Van de Stadt, Kapteyn, and Van de Geer 1985;Clark and Oswald 1996;Luttmer 2005;Ferrer-i Carbonell 2005;Perez-Truglia 2016). 4 Luttmer (2005), for instance, uses data from the United States to show that, holding own income constant, happiness increases with relative income in the area of residence.…”

Section: Introductionmentioning

confidence: 99%

Choosing Your Pond: Location Choices and Relative Income

Bottan,

Perez-Truglia

2019

AEA Randomized Controlled Trials

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We propose that, when individuals are deciding where to live, they care about the position in the income distribution in their prospective location. To test this hypothesis, we develop a new methodology to estimate preferences over location characteristics that combines choice data, survey data and information-provision experiments. We implement this methodology with a sample of 1,080 senior medical students who participated in the National Resident Matching Program. These subjects were choosing the cities to which they would move and live in for the next five years. We provide suggestive evidence that individuals care about what their relative income would be in a prospective city, and that those preferences have substantial heterogeneity by relationship status. Using a separate subject pool, we replicate our findings and provide tests for the underlying mechanisms.

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The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment

Cited by 45 publications

References 39 publications

Misperceiving inequality

Misperceiving inequality

How Much Does Your Boss Make? The Effects of Salary Comparisons

Choosing Your Pond: Location Choices and Relative Income

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