Social Preferences of Different Income Groups

2023-03-09

2023-05-31

Implemented inequality by impartial spectators.

In each treatment there are two participants who receive initial income that is unequal: one receives 12 ILS and the other receives nothing. The impartial spectators make a redistribution decision. They can redistribute 0,2,4,6,8,10 or 12 ILS from the participant with the higher income to the one with no income. The implemented inequality will be defined as the: (absolute value of the difference between the income of the two participants after the redistribution decision)/12

Distribution of types of fairness views.

See analysis plan.

The basic experimental design is similar to the one that appeared in our earlier experiment that studied social preferences over taste-based inequality (the pre-registration is on the AEA RCT registry with RCT ID: AEARCTR-0008171). There are only a few notable differences compared to the previous design. As a result, some chunks of the experimental design described below are taken from the pre-registration of the earlier study.

The general design is as follows:

Following the impartial spectator design in Almas et al. (2020), we will conduct an online experiment in order to capture the social preferences in the Israeli population. The experiment will be run by a panel company and will include roughly 3000 participants. The participants in the final stage of the experiment (the spectators) will be roughly 570 individuals with income that is above average and 570 individuals with an income that is below average (the income classification is based on self-reports of the panelists that are collected and updated regularly by the panel company). All participants will receive a participation fee. Some participants will receive an additional payment according to their performance, luck and decisions made by other participants in the study.

The study consists of three treatments: Luck, Merit and Taste. Using the impartial spectator design (Almas et al., 2020), spectators will be asked to redistribute payments between two other participants in the experiment who are randomly paired together. In each pair, one participant will have 12 ILS and the other will have nothing. The spectator will decide how to redistribute the money in the pair. The difference between treatments lies in the source of the initial inequality. In the first treatment the source will be luck. In the second treatment, it will be merit, i.e., the relative performance level in a task. Finally, in the Taste treatment, the source will be a decision of another participant who earned the money and chose to whom to transfer it based on some personal information provided by the pair.

Detailed Experimental Design

The Luck and Merit treatments include two stages and are quite similar to each other (both are based on Almas et al., 2020). The only difference between them is the source of inequality: In the Merit treatment it is based on performance in a task and in the Luck treatment it is random (each participant in a pair has the same probability to get the money for performing a task). The Taste treatment involves another stage. The details are given below.

Luck Treatment

Stage 1: Participants ("workers") perform a task. Upon completion, they are randomly matched into pairs. In each pair, one worker is randomly chosen (with probability 0.5) to receive 12 ILS for completing the task and the other receives no reward.
Stage 2: Additional participants ("spectators") are randomly assigned to the pairs. Each spectator decides how to redistribute the earnings in the pair (the options are 12-0, 10-2, 8-4, 6-6, 4-8, 2-10 and 0-12).

Merit Treatment

Stage 1: As the Luck treatment but the worker who receives the monetary amount for the task is the one who performed better in the task.
Stage 2: As in the Luck treatment.

Note:
Workers will perform two tasks. The first will be the basis for the Luck treatment and will not be graded. The second will be graded and will be the basis of the Merit treatment. Pairs of workers will be matched randomly and separately for each treatment.

Taste treatment

Stage 1: Participants will be asked to describe themselves in a paragraph using up to 200 words. After they write down this description they will be told that they will be randomly matched with another participant who completed the same task. In the second stage of the experiment a different participant (which we call here the "benefactor") will perform a task, earn 12 ILS for her/his performance, and will then be asked to transfer the amount to one of the two participants. The benefactor will be shown the paragraphs written by both participants and, based on them, will have to make his transfer decision.

Note: The participants write down the paragraphs before they read about the next stages of the payment procedure, i.e., they do not know the purpose of the paragraphs at the time of writing.

Stage 2: Benefactors will be recruited. They will perform a task and earn 12 ILS for it. They will then be shown the two paragraphs written by a randomly chosen pair from stage 1. They will be told that these paragraphs are the self-description that was written by the participants before the payment mechanism was explained to them. Based on these paragraphs, the benefactors will be asked to decide to whom to transfer their earnings (they will be told upfront that they cannot keep their earnings but may choose to whom it will be transferred).

Stage 3: Spectators will be given the opportunity to redistribute the money in the pair as in the Luck and Merit treatments.

Notes:

1. We refer in the pre-registration (but not in the experiment) to the participant who receives the money from the benefactor as the "beneficiary".

2. All the information regarding the different stages and the payment procedure is made clear in the instructions to all participants in the most transparent manner (see instructions that will be made public after the experiment is completed).

3. Spectators will redistribute money only for one pair from one treatment (i.e., the analysis will be held between participants).

References:

Almås, I., Cappelen, A.W., & Tungodden, B. (2020). Cutthroat capitalism versus cuddly
socialism: Are Americans more meritocratic and efficiency-seeking than
Scandinavians? Journal of Political Economy, 128 (5), 1753-1788.

All randomizations will be made using a computer program.

Individual

No

No clusters planned.

The number of observations that will be relevant to the data analysis is roughly 1140 (roughly 380 spectators in each treatment). Half of them will be of below-average income and half will be of above-average income.

We have 4 types of participants:

Participants in the first stage of the Taste treatment - 760
Benefactors in the second stage of the Taste treatment - 380
Workers (first stage of Luck and Merit treatments) - 760
Spectators (380 for each treatment) - 1140

Total - 3040

The power calculation is attached in the Docs & Materials section.

Analysis_Plan5.pdf