Social Preferences Regarding Inequalities in Income and Inherited Wealth

2021-11-01

2022-01-15

Redistribution choices of impartial spectators

Distribution of types of fairness views

See analysis plan.

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 subjects will be a representative sample of the adult Israeli population. All subjects will be registered panelists of a survey company and they will receive a participation fee. Some subjects will receive an additional payment according to their performance, luck and decisions made by other subjects in the study.

The study consists of three treatments: luck, merit and inheritance. Using the impartial spectator design used in Almas et al. (2020), spectators will be asked to redistribute payments between two other subjects in the experiment who are randomly paired together. In each pair one subject will have the total amount of earnings and the other will have nothing. The spectator will decide freely 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 based on merit, i.e., relative performance in a task. Finally, in the inheritance treatment, it will be based on a decision of another subject who earned the money and chose to whom to transfer his income based on some information regarding the pair's hobbies.

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.

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 subject in a pair has the same probability to get the money for performing a task). The inheritance treatment involves another stage. The details are given below.

Luck Treatment

Stage 1: Subjects (called "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 Subjects (called "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 and so on).

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 will be matched randomly and separately for each treatment.

Inheritance treatment

Stage 1: Subjects (called "participants") will be asked to list their 5 most favorable hobbies from a list of hobbies. Upon completion they will be randomly matched into pairs.
Stage 2: Subjects (called "earners") will perform a task and earn 12 ILS for it. They will then be given the list of hobbies of a randomly chosen pair from stage 1 and, based on the list of hobbies of each participant in the pair, 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.

Notes:
1. All the information regarding the different stages and the procedure for payment is made clear in the instructions.
2. Spectators will redistribute money only for one pair (the analysis is between subjects).

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 270 (90 spectators in each treatment).

We have 4 types of subjects (the names are described in the experimental design:

“Participants” – 180
“Earners” – 90
“Workers” – 180 (luck treatment) + 180 (merit treatment) = 360
“Spectators” – 270
Total – 900 participants

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