Working Paper Series
Mounir Karadja, Johanna Möllerström
Richer (and Holier) Than Thou? The Effect of Relative Income Improvements on Demand for Redistribution
() and David Seim
Abstract: We study the extent to which people are misinformed about
their relative position in the income distribution and the effects on
preferences for redistribution of correcting faulty beliefs. We implement a
tailor-made survey in Sweden and document that a vast majority of Swedes
believe that they are poorer, relative to others, than they actually are.
This is true across groups, but younger, poorer, less cognitively able and
less educated individuals have perceptions that are further from reality.
Using a second survey, we conduct an experiment by randomly informing a
subsample about their true relative income position. Respondents who learn
that they are richer than they thought demand less redistribution and
increase their support for the Conservative party. This result is entirely
driven by prior right-of-center political preferences and not by altruism
or moral values about redistribution. Moreover, the effect can be
reconciled by people with political preferences to the right-of-center
being more likely to view taxes as distortive and to believe that it is
personal effort rather than luck that is most influential for individual
Keywords: Redistribution; Political preferences; Inequality; (follow links to similar papers)
JEL-Codes: D72; H23; (follow links to similar papers)
48 pages, September 26, 2014
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