Self-centered vs. non-self-centered inequality aversion
Last registered on June 12, 2018

Pre-Trial

Trial Information
General Information
Title
Self-centered vs. non-self-centered inequality aversion
RCT ID
AEARCTR-0002471
Initial registration date
June 07, 2018
Last updated
June 12, 2018 10:25 PM EDT
Location(s)
Region
Primary Investigator
Affiliation
UDELAR
Other Primary Investigator(s)
PI Affiliation
UDELAR
PI Affiliation
UDELAR
Additional Trial Information
Status
In development
Start date
2018-05-28
End date
2018-07-15
Secondary IDs
Abstract
Recently experimental economists have provided evidence that systematically refutes the self-interest hypothesis (Fehr and Schmidt, 2003). It suggests that individuals are strongly motivated by social preferences, concerns for fairness and reciprocity. Based in these foundations, there is an agreement in the empirical literature that individual's well-being depends on others individual's income or the income inequality (defined as any disparities in income between individuals (Clark & D'Ambrosio,2014)). Both ideas are related with the presence of social preferences and with different micro foundations of economic behavior (altruism, envy, pride, fairness,positionality, etc.). There is a wide variety of theoretical interpretations of these results, which seek to explain why people concern about the income of others or the income distribution.

In order to explain the reasons why people might be affected by income inequality, in this paper we focus on a particular notion of social preferences: inequality aversion. An overview of the different economic models available and recent empirical findings on this topic, suggest an overlapping of different strands of the literature about the notion of inequality aversion (Clark & D´Ambrosio; 2014). As a result, there are different approaches and alternative methods to measure inequality aversion, which makes it more difficult to reach an agreement on the relevance of inequality aversion and to understand why individuals care about the distributionof income in a society. Clark & D'Ambrosio distinguish between two broad groups of models to explain individual inequality attitudes: the Comparative approach and the Normative approach. While in the former, attitudes towards inequality depend on one’s ownposition relative to others in the income distribution, in the normative approach the individual's attitudes towards inequality are irrespective of where she appears in the distribution. Even in this second case, an individual might care about income inequality although she does not participate in this society.

These two broad notions of attitudes toward inequality lead to two types of measures of inequality aversion: self-centred inequality aversion (Fehr and Schmidt, 1999), and not self-centred inequality aversion (Carlsson et al 2003; 2005).

The aim of this paper is to estimate aversion to inequality, differentiating between self-centred inequality aversion and not self-centred inequality aversion. This objective allows us to obtain an unbiased measure of not self-centred inequality aversion. Furthermore, we provide evidence whether each notion of inequality are relevant for individuals.

We use an experimental survey design, which is an adaptation of Amiel& Cowell (1992). A sample of students from Universidad de la Republica (UDELAR) in Uruguay, will take part in the main experiment. Participation is voluntary and there was no show-up fee paid. Participants are asked to choose for several pairs of societies which one they would prefer for their grandchildren to live. The difference with previous papers is that in this experiment, the same individual is asked to choose when his grandchildren is at the median, the maximum and the minimum of the income distribution.Questionnaires also contained several questions regarding participant’s opinions, attitudes and preferences. This information, together with socioeconomic background of students provided by University, will be used to investigate which mechanisms explain aversion to inequality.

This paper contributes evidence about importance of distinguishing between both notions of inequality aversion (self centered vs not self centered inequality aversion). Also, suggests a methodological approach to measure not self-centered inequalityaversion unbiased. We include a set of test to understand why people care about these two notions of income inequality. Finally, there are no previous measures of inequality aversion for Uruguay, and even, there is little evidence about this topic for developing countries.

The distinction between self-centred and not self-centred inequality aversion helps us to better understand people behavior and social preferences. Furthermore, this distinction is relevant, because both types of inequality aversion generates very different incentives, which could affect optimal tax rates (Aronsson and Johansson-Stenman 2016).
External Link(s)
Registration Citation
Citation
Bergolo, Marcelo, Santiago Burone and Martin Leites. 2018. "Self-centered vs. non-self-centered inequality aversion." AEA RCT Registry. June 12. https://www.socialscienceregistry.org/trials/2471/history/30664
Experimental Details
Interventions
Intervention(s)
The main inequality aversion experiment
We use an experimental survey design, which is an adaptation of Amiel & Cowell (1992). A sample of students from Universidad de la Republica (UDELAR) in Uruguay, will take part in the main experiment.

Participants are asked to choose for several pairs of hypothetical societies which one they would prefer for their grandchildren to live. The difference with previous papers is that in this experiment, the same individual is asked to choose when his grandchildren in different points of the income distribution. In elections, participants must sacrifice their own income to reduce society income inequality. But each respondent carried out their decision in three alternative points of the income distribution: The median, the maximum and the minimum of the income distribution.

The control group participants always choose their societies without any additional information.

Information-Provision Experiment: There were three pieces of information to be randomly allocated:

a) Effort treatment: The position of his grandson in the income distribution is the result of the effort he has made
b) Circumstances treatment: The position of his grandson in the income distribution is the result of luck.
c) Mobility treatment: Your grandchild has certain chances of achieving upward (or downward mobility)

Module 3: Questionnaires also contained several questions regarding participant’s opinions, attitudes and preferences.
Intervention Start Date
2018-05-28
Intervention End Date
2018-06-30
Primary Outcomes
Primary Outcomes (end points)
Not self-centered inequality aversion
Primary Outcomes (explanation)
See Aronsson and Johansson-Stenman (2016)
Secondary Outcomes
Secondary Outcomes (end points)
Self-centered inequality aversion
Secondary Outcomes (explanation)
Self-centered inequality aversion, namely those suggested by Fehr and Schmidt (1999). That notion includes envy effect, altruism, and pride. Also, we consider the potential tunnel effect.
Experimental Design
Experimental Design
We send an e-mail to invite a sample of students from Universidad de la Republica (UDELAR) in Uruguay to participate in the survey. Participation is voluntary and there was no show-up fee paid. We include the link to access to the surveys, that we built with Qualtrics' online survey software.

We collected data from three distinct modules. (1) Socioeconomic and demographic characteristics (2) the main inequality aversion experiment (8 elections in the mean; 8 elections in the minimum and 8 elections in the maximum); (3) questions on preferences for redistribution, attitudes and political beliefs.
Experimental Design Details
Randomization Method
Randomization done in office by a computer (Qualtrics)
Randomization Unit
Students
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
We sent the invitation to participate in the experiment (which is voluntary) to 2956 studentes. In the experiment we have three groups: a control group and three treatment groups. The assignment to each treatment was random, performed by a computer (Qualtrics), the probability of being assigned to each group was the same.
Sample size: planned number of observations
We sent the invitation to participate in the experiment (which is voluntary) to 2956 studentes. We expect a response rate of 25%, being 740 the expected number of final observations. If the response rate is lower, is possible to made a second sending of the survey, only if necessary.
Sample size (or number of clusters) by treatment arms
Being equal the probability of assignment to each group, the size of each treatment (and control) group is 185 observations.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers