Research Projects

The Consequences of Inequality: Beliefs and Redistributive Preferences with Morten Støstad

Working Paper

Abstract: What are the societal consequences of economic inequality, and how do concerns for these consequences affect individuals' redistributive preferences? This paper examines beliefs about how economic inequality changes society and establishes a causal link between such inequality externality beliefs and redistributive preferences. Using two independent representative surveys of a total of 6,731 U.S. citizens, we show that nearly the entire U.S. population believes that economic inequality affects society. A large and consistent majority believes that more economic inequality leads to negative societal outcomes such as increased crime, deteriorating democratic institutions, and lower economic growth. We establish a causal link from these inequality externality beliefs to individuals' redistributive preferences by using exogenously provided video information treatments. With this and other methods we estimate that inequality externality beliefs are about two-thirds as impactful for individuals' redistributive preferences as broad economic fairness views, an integral determinant of these preferences. There is more consensus about inequality externality beliefs than fairness views across incomes and party lines, however, and inequality externality arguments seem to cause less anger. Our results indicate a salient trade-off between inequality externality-based arguments and fairness-based arguments in debates on redistributive preferences. Whereas fairness-based arguments are somewhat stronger, externality-based arguments are less polarizing and present an opportunity for consensus-building.



Motivating Beliefs in a Just World

Working Paper, submitted 

Abstract: This paper studies whether individuals distort their beliefs about the relative importance of effort and luck to motivate themselves to exert effort. To that end, I develop a novel experimental design where past experience of success or failure serves as a noisy signal about the true importance of effort in achieving success. To test whether individuals distort their beliefs to motivate future effort, I vary the moment in time when subjects are informed about an effortful task to be performed later in the experiment. Subjects who receive the information before belief elicitation face an incentive to distort their beliefs to motivate effort in the later task. The results show that such individuals are more likely to believe that their effort is important for success. Motivating belief distortion is particularly pronounced for subjects who receive disincentivizing news about the true state of the world, i.e. that success depends on luck rather than on effort. I additionally test whether motivating belief distortion affects subjects' willingness to distribute money between two other individuals as a third-party spectator. I find no evidence that distributive behavior differs across the two treatment groups. These results suggest that individuals' luck-effort beliefs not only depend on past or current events that inform about the true state of the world but are also endogenous to the incentive structure individuals expect to face.


Principal’s Distributive Preferences and the Incentivization of Agents with Sophie Cêtre

Experimental Economics, 2023

Published Paper 

Abstract:  Do principals' distributive preferences affect the allocation of incentives within firms? We run a Principal-Agent lab experiment, framed as a firm setting.  In the experiment, subjects are randomized in the principal or worker position. Principals must choose piece rate wage contracts for two workers that differ in terms of ability. Workers have to choose an effort level that is non-contractible. Principals are either paid in proportion to the output produced (Stakeholder treatment) or paid a fixed wage (Spectator treatment). We study how principals make trade-offs between incentive concerns (motivating workers to maximize output) and their own normative distributive preferences. We find that, despite the firm-frame and the moral hazard situation, principals do hold egalitarian concerns, as principals are on average willing to trade off their firm's performance (and so their own income) for more wage equality among their workers. The willingness to reduce inequality among workers is sensitive to both extensive and intensive margin incentives, which shows that principals' choices are shaped by incentives that they face themselves.


How Laws Affect the Perception of Norms: Empirical Evidence from the Lockdown with Roberto Galbiati, Emeric Henry, and Nicolas Jacquemet

PLOS One, 2021

Published Paper, Press: Vox-Column 

Abstract: Laws not only affect behavior due to changes in material payoffs, but they may also change the perception individuals have of social norms, either by shifting them directly or by providing information on these norms. Using detailed daily survey data and exploiting the introduction of lockdown measures in the UK in the context of the COVID-19 health crisis, we provide causal evidence that the law drastically changed the perception of the norms regarding social distancing behaviors. We show that this effect of laws on  perceived  norms is mostly driven by an informational channel and that the intervention made perceptions of social norms converge to the actual prevalent norm.


Preferences over income distribution: Evidence from a choice experiment with Sophie Cêtre, Claudia Senik, and Thierry Verdier

Journal of Economic Psychology, 2019

Published Paper 

Abstract: Using a choice experiment in the lab, we assess the relative importance of different attitudes to income inequality. We elicit subjects’ preferences regarding pairs of payoff distributions within small groups, in a firm-like setting. We find that distributions that satisfy the Pareto-dominance criterion attract unanimous suffrage: all subjects prefer larger inequality provided it makes everyone weakly better off. This is true no matter whether payoffs are based on merit or luck. Unanimity only breaks once subjects’ positions within the income distribution are fixed and known ex-ante. Even then, 75% of subjects prefer Pareto-dominant distributions, but 25% of subjects engage in money burning at the top in order to reduce inequality, even when it does not make anyone better off. A majority of subjects embrace a more equal distribution if their own income or overall efficiency is not at stake. When their own income is at stake and the sum of payoffs remains unaffected, 20% of subjects are willing to pay for a lower degree of inequality.