Growth and Inequality: Experimental Evidence on How Misperceptions Affect Redistribution

Abstract

Many policies affect future inequality, from taxation to investments in education. Therefore, citizens’ support for these policies may depend on their beliefs about how inequality will evolve over time. In three large-scale experiments, I examine how well individuals predict future inequality in the presence of economic growth, and I examine how beliefs about inequality influence people’s preferences for redistribution. I find that most people underestimate future increases in inequality, but this is inconsequential as beliefs about inequality do not influence preferences for redistribution. Rather, what matters is whether people know if redistribution will come at a personal cost to themselves.

Publication
Growth and Inequality: Experimental Evidence on How Misperceptions Affect Redistribution
Jonas Pilgaard Kaiser
Jonas Pilgaard Kaiser
Postdoc in Economics

Jonas Pilgaard Kaiser is a postdoc in economics at the Technical University of Berlin. His primary research interests are within behavioural and experimental economics.

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