Perceived Inequality, Reference Groups and Preferences for Redistribution Among High Earners

Last registered on November 15, 2021

Pre-Trial

Trial Information

General Information

Title
Perceived Inequality, Reference Groups and Preferences for Redistribution Among High Earners
RCT ID
AEARCTR-0008565
Initial registration date
November 13, 2021
Last updated
November 15, 2021, 1:37 PM EST

Locations

Region

Primary Investigator

Affiliation
INSEAD

Other Primary Investigator(s)

PI Affiliation
INSEAD
PI Affiliation
Erasmus University Rotterdam

Additional Trial Information

Status
Completed
Start date
2018-05-22
End date
2019-08-01
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We investigate attitudes towards inequality among the ``working rich" using a unique sample of nearly 1,000 graduates from a highly ranked MBA program and a representative sample of Americans. We show that (1) high-earning individuals are far more likely to know their rank in the income distribution and (2) a survey experiment reveals that comparisons with peers or others shape their redistributive preferences. This reference group treatment leads to an 18% drop in the income share allocated to the richest 1% but has no discernible effect on taxation preferences. We discuss the contribution of the comparative and normative functions of reference groups as potential mechanisms.
External Link(s)

Registration Citation

Citation
Bellet, Clément, dylan glover and Mark Stabile. 2021. "Perceived Inequality, Reference Groups and Preferences for Redistribution Among High Earners." AEA RCT Registry. November 15. https://doi.org/10.1257/rct.8565-1.0
Experimental Details

Interventions

Intervention(s)
We implement a survey experiment in which we collect responses to a series of baseline questions including information on current (gross) income and demographic characteristics, as well as questions about how much they think about inequality and questions about their political views. Within the survey, we randomly allocate respondents into one of three local reference group treatments or a control group. The treatment condition randomly asks respondents to think about three members of either a) their family (same generation), b) their colleagues or c) their classmates and then rank themselves financially within this local reference group. It then asks them to assess whether the financial success of the highest ranked person within this group is driven more by effort or by luck. The control group receives no reference group questions. We repeat the above survey experiment using a random sample of approximately 3800 individuals in the US collected through Turk Prime.
Intervention Start Date
2018-05-22
Intervention End Date
2019-08-01

Primary Outcomes

Primary Outcomes (end points)
Perceived place in national income distribution, preferred national income distributions, preferred taxation schedules, whether financial success is more due to effort or luck.
Primary Outcomes (explanation)
We ask individuals to build their preferred income distribution by asking them to distribute the share of income across 4 groups in a 100 person society: the poorest 50 people, the middle 40 people, the 9 next richest people and the richest person in society. We also let them perform a similar allocation with regards to the income tax rates people in each of the four categories (bottom 50, next 40, next 9 and top individual) ought to pay as a share of their total income. Using this information on preferred income distributions, we construct two indexes: a (lower bound) Gini coefficient for their preferred society and we rely on a nonparametric definition of the Gini index, defined as twice the area between the egalitarian line and the Lorenz curve. We recover the Lorenz curve by linear interpolation using the four income shares (and corresponding population shares). This is interpreted as the lower bound of the true Gini index as well as the progressivity of the constructed tax scheme. Here we simply re-construct a new income distribution applying respondent's preferred tax scheme to their original income distribution. We then compute the resulting (lower bound) after-tax Gini index. The tax progressivity index is the difference between the pre-tax and after-tax Gini indices.

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We use a survey experiment in which respondents are randomly allocated mid questionnaire into either treatment conditions or a control group.
Experimental Design Details
Randomization Method
Respondents are randomized into the 3 treatment or control branches mid questionnaire using the survey software Qualtrics.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
Same as number of individuals
Sample size: planned number of observations
4800
Sample size (or number of clusters) by treatment arms
The 4800 individuals are randomized with probability 1/4 into the 3 treatment arms or control group.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
INSEAD IRB Board
IRB Approval Date
2018-03-01
IRB Approval Number
N/A

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