Social preferences and responses to changes in inequality perception

Last registered on May 25, 2021

Pre-Trial

Trial Information

General Information

Title
Social preferences and responses to changes in inequality perception
RCT ID
AEARCTR-0007716
Initial registration date
May 25, 2021
Last updated
May 25, 2021, 4:22 PM EDT

Locations

Primary Investigator

Affiliation

Other Primary Investigator(s)

PI Affiliation
University of Zurich
PI Affiliation
University of St Gallen
PI Affiliation
University of Zurich

Additional Trial Information

Status
In development
Start date
2021-05-27
End date
2021-07-31
Secondary IDs
Abstract
We examine the role of social preferences for individuals’ responses to changes in inequality perceptions. In previous research (Epper-Fehr-Senn 2020) we have shown that social preferences strongly reduce the decline of support for redistribution that occurs at higher incomes: Higher income levels are associated with a strong decline in political support for redistribution for selfish individuals but inequality averse individuals and individuals with social welfare concerns exhibit a much smaller decline. Here, we study how individuals respond to a downwards shock in their beliefs about inequality and how their response interacts with their social preferences. We hypothesize that an information shock that induces individuals to reduce their belief about the share of income received by the top 1% of income earners in Switzerland will lead to an average decrease in support for redistribution. We further conjecture that this reduction is particularly pronounced for inequality averse individuals with an above-median income (relative to selfish individuals with an above-median income). This conjecture follows from the results reported in Epper-Fehr-Senn (2020), indicating that inequality averse individuals with above-median incomes display larger political support for redistribution than selfish individuals with an above-median income.
External Link(s)

Registration Citation

Citation
Epper, Thomas et al. 2021. "Social preferences and responses to changes in inequality perception." AEA RCT Registry. May 25. https://doi.org/10.1257/rct.7716-1.0
Experimental Details

Interventions

Intervention(s)
See below.
Intervention Start Date
2021-05-27
Intervention End Date
2021-07-31

Primary Outcomes

Primary Outcomes (end points)
Donations to civic organizations that support an upcoming redistributive initiative (the so-called 99% initiative) or to civic organizations that oppose this redistributive initiative. The 99% initiative aims at increasing taxation for the top 1% income earners and using the tax proceeds to reduce taxes for low and middle labor incomes or increase social transfers to low income households.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
We will also explore the effects of the treatment (and its interaction with income and social preferences) on other questionnaire measures of support for redistribution such as “the government should reduce income inequality by increasing taxes for the rich".
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Our experimental design involves 2 waves.

In wave 1 (which we conducted in 2020), we measured individuals’ social preferences (using dictator games), their beliefs about income inequality in Switzerland, their (self-reported) income, their beliefs about the determinants of success, and a variety of other questionnaire measures. This data allows us to identify the selfish and the inequality averse individuals, and to classify individuals according to their self-reported incomes. In addition, the data on beliefs about income inequality indicate that a large majority of subjects greatly overestimates income inequality. We aim at shocking these perceptions about income inequality in wave 2.

In wave 2 (the upcoming study, which is conducted with the same sample as wave 1), we test the predictions described above by providing half of our sample with information that is aimed at reducing their perception of inequality. Because the majority of subjects overestimate the share of income that the top 1% of income earners receive, providing true information about the share that the top 1% actually receives will shock the inequality perception of most subjects downwards.

Altogether, the data from wave 1 together with the information shock treatments in wave 2 make it possible to assess the causal impact of information-induced shocks in perceived inequality on political support for redistributive policies, and to study the role of social preferences and income levels for individuals’ response to the information shock.
Experimental Design Details
We randomize respondents into one of two conditions: the information shock treatment and a pure control group. Subjects in the income shock treatment receive information about the income share of the top 1% income earners in Switzerland. Subjects in the control group do not receive any information. Subsequently, we measure subjects’ support for redistribution using a donation task. In the donation task, subjects receive 20 CHF from us. They can donate up to 20 CHF to either civic organizations that support the 99% Initiative or to civic organizations that oppose this initiative. The difference in donations between the information shock treatment and the control treatment informs us about the impact of the information shock on redistributive preferences.
Randomization Method
We implement a stratified randomization protocol (to treatment and control) with 24 strata. The strata are generated by distinguishing between below and above-median income earners, below and above median beliefs regarding whether effort/ or luck determines individual success, 3 social preferences groups (inequality averse, social welfare concerns, selfish; measured in the baseline), and above versus below median belief about income inequality in Switzerland.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
-
Sample size: planned number of observations
1383 individuals successfully participated in the first wave of this study conducted in 2020. Participants were contacted by a national survey provider (LINK) and are broadly representative of the Swiss population in the French-speaking and German-speaking parts of Switzerland. We will invite all these 1383 participants for the second wave. According to our panel provider, we can expect a participation rate of roughly 70 to 75%, which would result in 968 to 1037 individuals, i.e., roughly 1000 individuals.
Sample size (or number of clusters) by treatment arms
roughly 500 in the information shock treatment and roughly 500 control condition
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name
Human Subjects Committee of the Faculty of Economics, Business Administration and Information Technology at the University of Zurich
IRB Approval Date
2021-05-10
IRB Approval Number
IRB # 2021-032

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials