Negative income shocks and redistributive preferences

Last registered on July 06, 2021

View Trial History

Pre-Trial

Trial Information

General Information

Title

Negative income shocks and redistributive preferences

RCT ID

AEARCTR-0007913

Initial registration date

July 02, 2021

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

July 06, 2021, 10:43 AM EDT

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

Locations

Country

United Kingdom of Great Britain and Northern Ireland

Region

Online experiment using Prolific (sample: high income countries)

Primary Investigator

Name

Anna Hochleitner

Affiliation

University of Nottingham

Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status

In development

Start date

2021-07-05

End date

2021-07-30

Keywords

Behavior, Lab, Welfare

Additional Keywords

redistributive preferences, income shocks, inequality

JEL code(s)

C91, D63, D91

Secondary IDs

Abstract

Times of economic crises raise questions about how to distribute burdens and support, evoking a debate about what is fair. While previous research has shown that, even in economically stable times, there exists a plurality of fairness views, it is less clear how and whether the latter react to a changing economic environment. In this project, we use a series of experiments to explore whether negative income shocks affect individual preferences for redistribution. The experiment consists of two parts: a production and a redistribution stage. After having earned an endowment, participants are paired in groups of two and given the opportunity to redistribute income. We then explore the effect of negative income shocks, varying both who is affected and what is known about the experiences of others. Finally, in a separate treatment, we introduce information about experiences of real world economic shocks into our set-up and investigate the impact of these on behaviour in the laboratory.

External Link(s)

Registration Citation

Citation

Hochleitner, Anna. 2021. "Negative income shocks and redistributive preferences." AEA RCT Registry. July 06. https://doi.org/10.1257/rct.7913-1.0

Sponsors & Partners

Experimental Details

Interventions

Intervention(s)

We exogenously vary the experience of negative income shocks in an experimental setting and test how the latter affect subsequent redistribution decisions.

Intervention (Hidden)

Intervention Start Date

2021-07-05

Intervention End Date

2021-07-30

Primary Outcomes

Primary Outcomes (end points)

Our key outcome variable is the amount participants allocate to themselves when being asked to distribute total earnings between themselves and another participant.

Primary Outcomes (explanation)

Participants are being matched in groups of two and can re-distribute the total amount both of them earned in a preceding real effort task.

Secondary Outcomes

Secondary Outcomes (end points)

We are also interested in which factors could influence allocation. Potential mediating variables we are exploring in this study are the closeness between participants and affect.

Secondary Outcomes (explanation)

Experimental Design

The experiment consists of two parts: a production and a redistribution stage. After earning a flat fee through completing a real-effort task, participants may suffer a negative income shock. In the subsequent redistribution stage, participants are paired in groups of two and given the opportunity to redistribute the total earnings both participants brought into this stage. Across treatments, we vary both who has been affected by a negative shock (self, other, both) and what is known about the experiences of others. Finally, in a separate treatment, we introduce information about experiences of real world economic shocks into our set-up.

Experimental Design Details

Randomization Method

Participants are randomized into different treatments by a computer. To enhance our ability to control for a participant’s recent personal experience we stratify along recent economic shocks.

Randomization Unit

Randomization at the individual level.

Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters

Treatments are not clustered. Part of the analysis will require clustering at the individual level.

Sample size: planned number of observations

Total sample size across treatments: 1340 participants.

Sample size (or number of clusters) by treatment arms

In total, 670 participants experience no negative income shocks, while 670 are hit by a shock.
For 804 participants negative income shocks are exogenously induced in the lab. For 536 participants we use information about the experience of real world economic shocks.

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Our sample size is informed by a power analysis based on comparisons of means that allows to detect an effect at a significance level of 5% with 90% power. It is based on an average effect size of 0.36 standard deviations that is informed by previous research on redistributive preferences.

Supporting Documents and Materials

IRB