2017

Richer (and Holier) Than Thou? The Effect of Relative Income Improvements on Demand for Redistribution

Reprint No. 2017:20

Author(s): Mounir Karadja, Johanna Möllerstrom and David SeimYear: 2017 Title: Review of Economics and Statistics Volume (No.): 99 (2) Pages: 201–212
Online article (restrictions may apply)
Preliminary version


We use a tailor-made survey on a Swedish sample to investigate how individuals' relative income affects their demand for redistribution. We first document that a majority misperceive their position in the income distribution and believe that they are poorer, relative to others, than they actually are. We then inform a subsample about their true relative income and find that individuals who are richer than they initially thought demand less redistribution. This result is driven by individuals with prior right-of-center political preferences who view taxes as distortive and believe that effort, rather than luck, drives individual economic success.


Reference:
Karadja, Mounir, Johanna Möllerstrom and David Seim (2017), "Richer (and Holier) Than Thou? The Effect of Relative Income Improvements on Demand for Redistribution". Review of Economics and Statistics 99(2), 201–212.

David Seim

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