Willingness to compensate for unequal circumstances

Last registered on June 25, 2024

Pre-Trial

Trial Information

General Information

Title
Willingness to compensate for unequal circumstances
RCT ID
AEARCTR-0013863
Initial registration date
June 24, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
June 25, 2024, 2:11 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Affiliation
UDELAR

Other Primary Investigator(s)

PI Affiliation
UDELAR
PI Affiliation
UDELAR
PI Affiliation
UAB
PI Affiliation
UDELAR

Additional Trial Information

Status
On going
Start date
2024-06-24
End date
2025-06-24
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We conduct a survey to understand the valuation that individuals make when deciding how much to transfer to compensate for different circumstances. To do this we present hypothetical scenarios where the respondent has to allocate money to two potential beneficiaries. The beneficiaries are equal in all their characteristics but differ on one silent attribute associated with a circumstance. In addition, we randomly assign some individuals to receive information about the effort the potential beneficiaries put into searching for a job. The survey collects information surveying young people. On one hand, our results will provide evidence about how individuals value different circumstances. In addition, results will allow us to understand how individuals perceive the relationship between effort and circumstances.

Registration Citation

Citation
Failache, Elisa et al. 2024. "Willingness to compensate for unequal circumstances." AEA RCT Registry. June 25. https://doi.org/10.1257/rct.13863-1.0
Experimental Details

Interventions

Intervention(s)
We use an experimental survey design, which is an adaptation of Almas, Cappelen y Tungodden (2020) to understand the role of circumstances in the willingness to compensate for income inequalities. The experiment will be carried on two samples: a) a sample of students from Universidad de la República (UDELAR) in Uruguay; b) a sample of young people from the Longitudinal Study of Well-being in Uruguay (Estudio Longitudinal del Bienestar del Uruguay - ELBU), a longitudinal study of first graders attending public schools in 2004.
In the experiment, participants are invited to participate as decision-makers in hypothetical scenarios in which participants must choose how to distribute public funds. Specifically, they must decide how to allocate funds among different pairs of potential beneficiaries of a cash transfer program. The names of the beneficiaries are chosen to be neutral and are referred to as K and J when asked about the income transfer each should receive.
The hypothetical situations are set in a neutral country and use the dollar as the monetary unit to remove the spectator from the Uruguayan context. In this country there is no unemployment insurance. Participants have 500 dollars of public funds to distribute between two beneficiaries. This amount of money is equivalent to a minimum wage in this hypothetical country. Both beneficiaries are eligible and in need of the money. They are unemployed women, 35 years old, that have all characteristics equal but differ in one unfavorable circumstance that is made salient in the text. The unfavorable circumstance determines an income gap of 200 dollars favorable to the more affluent beneficiary. We define four types of circumstances for this purpose: i) an economic shock associated with a crisis that can affect a person at any stage of their life and is not dependent on parents' decisions; ii) birth and subsequent life trajectory in a poor household, a consequence of (inactive) parental decisions affecting their children through differential access to resources; iii) obsolete job inherited from the family; and iv) Physical condition is diminished.
With these alternative scenarios, we aim to identify how malleable preferences for redistributive policies are under different circumstances. The differences in responses from the same person (within) allow us to elicit the participants’ preferences about which circumstances should be compensated.
In a fifth scenario, we keep the circumstances identical to the fourth scenario but change the magnitude of the income gap. Instead of being 500, it is now 200. This aims to evaluate whether the amount of the transfer and the motivations for compensating the circumstance are sensitive to the level of inequality.
Additionally, the participants are divided into two groups labeled: a) treatment with impact on effort; and b) treatment without impact on effort. Both groups face the same described hypothetical situations, with the difference that in the case of the “treatment with impact on effort” we add a text that explicitly says that "the unfavorable circumstance made the beneficiary put less effort into searching for a new job." This aspect allows us to observe whether the participants understand that the effects of the circumstance on effort should also be compensated, and aims to identify if compensations are malleable to the effort made by individuals, conditioned by the circumstances. Therefore, the differences in responses between treatment with and without impact on effort allow us to identify whether individuals prefer to compensate for the effect of circumstances on effort.
Participation is voluntary but as an incentive for participating in the survey, participants will be entered into a drawing to win money to be used in a mall. We use an online platform to develop the self-administered survey.
Intervention Start Date
2024-06-24
Intervention End Date
2024-12-31

Primary Outcomes

Primary Outcomes (end points)
A measure of the willingness to compensate for unequal circumstances.
Primary Outcomes (explanation)
The allocation of the U$S 500 between the two beneficiaries who face different circumstances measures individuals’ willingness to compensate. We expect to use at least three measures: (1) a dummy variable that indicates if more money is allocated to the disadvantaged person; (2) the value of the difference in money allocated to the different beneficiaries; (3) a dummy variable that indicates if the allocation compensates for the initial gap between beneficiaries. (4) the value of the difference in the final distribution of income between both beneficiaries.
The study will test the following hypotheses: (H1) The transfer amount is greater for the beneficiary facing an unfavorable circumstance. (H2) The transfer amount varies between circumstances.
In addition, we will study if the transfer amount is lower or higher for the treatment with impact on the effort group compared with the treatment without impact on effor group. This will allow us to assess if individuals compensate more, or less, when they know that the circumstance also affected the level of effort that the beneficiary put on looking for a job. We do not have an a priori hypothesis about the sign of this relationship.

Secondary Outcomes

Secondary Outcomes (end points)
As secondary outcomes we will measure:
The probability of changing the allocation after a confirmation question.
The primary outcomes mentioned before but when the beneficiaries face a different income gap (100 instead of 200 in the original scenario).
The primary outcomes mentioned before but when they can also allocate money to other public programs.
The primary outcomes mentioned before but when we make salient that the transfer has to be paid by a 5% income tax
The primary outcomes mentioned before but when we make salient that the transfer has to be paid by a 3% income tax
A measure of the willingness to compensate for “pure effort”




Additionally, we will analyze heterogeneous effects according to:


- Background characteristics of the respondent
- Social desirability questions
- Gender
- Academic performance (Avaliable in academic registry)
- Personality traits (Avaliable in ELBU)
Secondary Outcomes (explanation)
After each choice, in each of the 4 scenarios, participants receive information about the distributive result of their allocation considering the initial inequality. They are asked if they agree with this allocation. If they do not agree, they are asked to reallocate. Additionally, each participant answers for one circumstance whether they would change the beneficiary's allocation if the initial inequality changes. Each participant also responds about their preferences for budget allocation of public programs and whether they would change the allocation between beneficiaries if this implies that they have to pay taxes. Finally, each participant chooses the amount of transfer when the income gap of the beneficiaries is explained solely by differences in effort.

Experimental Design

Experimental Design
As mentioned, the intervention consists of two informational treatment experiments. On one side, we conduct a comparison within individuals considering the response to different scenarios where information related to the circumstances vary. In addition, we randomly assign a group of participants to have extra information regarding an effort vector.
The study is done with an online self-administered survey and the interventions (information regarding circumstances and effort of beneficiaries to look for a job) are embedded in the online survey.
Recruitment is done through two main channels. First, via an institutional email to students from Universidad de la República (the main university in Uruguay). The email with the invitation to participate in the study and the link to the survey is sent to students enrolled in one of the mandatory courses in the first year of the university. In addition, we invite participants from a cohort study developed in Instituto de Economía, (ELBU). In both cases, two reminders will be sent by email. In the case of the young participants in the ELBU panel they will also be contacted by phone.
We collected data from six different modules. (1) Consent information; (2) Socioeconomic and demographic characteristics; (3) The compensation experiment (detailed below); (4) Questions on preferences for redistribution, attitudes, and political beliefs (5) Attention check questions and social desirability module; (6) Consent to merge the survey with other sources of information.
Experimental Design Details: the compensation experiment
The survey aims to measure the willingness to compensate for different circumstances individuals face. To do this, we present hypothetical scenarios where two unemployed 35-year-old women are potential beneficiaries of a cash transfer program. The two women are identical in all characteristics except for one salient attribute associated with one unfavorable circumstance that varies in the different scenarios. The attributes are the following, and are presented in a random order to all the individuals:
a) Crisis: the attribute is having experience in a job that is now not demanded because of the crisis.
b) Parent's influence: the attribute is that the individual have experience but only in obsolete jobs inherited from the family.
c) Physical condition: the attribute is the physical limitation that affect the job opportunities
d) Poor household: the attribute is that because of being born in a poor household, the individual has less job opportunities.


All participants make the series of decisions with information about the 4 alternative circumstances in a random order. In addition, all participants are randomly assigned to two groups:


i) treatment without impact on effort.


ii) treatment with impact on effort:


In the first group, the text highlights the role of circumstances in explaining the income gap between the two beneficiaries. In the second group, the text emphasizes that unfavorable circumstances lead to a reduction in effort and together with the circumstance determine the income gap. Specifically, the disadvantaged beneficiary puts in less effort in the job search and faces relative deprivation due to these unfavorable circumstances. Then, we ask each individual to decide how to allocate a $500 total transfer between the two potential beneficiaries. h.
Experimental Design Details
Not available
Randomization Method
Randomization is done through the software used for the online survey (Survey Solutions). Each individual has the same probability of being assigned to each group.
Randomization Unit
The unit of randomization are the respondents of the survey.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
We will send the invitation to participate in the experiment to 3000 university students. We expect a response rate of 15%, therefore, we expect to have 450 observations from students. In addition, we will send the invitation to 750 young respondents of the ELBU. We expect a response rate of 60%, therefore, we expect to have 450 observations from ELBU.
Sample size: planned number of observations
We expect to have 900 observations.
Sample size (or number of clusters) by treatment arms
The information treatment associated with circumstances will be answered by all participants, therefore we will have 900 responses for each circumstance.
Treatment associated with effort will be randomly assigned with equal probability of assignment to each group. We expect to have 450 observations in the treatment group.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Comité de ética en investigación https://fcea.udelar.edu.uy/integrantes-comite-etica-investigacion.html
IRB Approval Date
2024-05-03
IRB Approval Number
N/A