Are People Willing to Pay for Reduced Inequality?

Abstract

Would consumers be willing to pay more for goods for which there is less inequality in wages across those involved in their production? In incentive-compatible behavioral choice studies on representative samples of the English and U.S. populations, we find significantly positive willingness to pay for such inequality reductions in more than 80% of subjects. Although it varies with political leaning and the extent of the inequality reduction, willingness to pay is positive across the political spectrum and for all studied inequality differences. It is higher for more intuitive and informative inequality-reporting formats. Our findings have policy implications for both governments and firms. On the one hand, they suggest the promise of universal provision of product-level inequality information as a tool for moderating income inequality. On the other hand, they highlight the potential relevance of inequality reporting for firms’ marketing strategies. This paper was accepted by Dorothea Kübler, behavioral economics and decision analysis. Funding: This work was supported by the Agence Nationale de la Recherche [LabEx Ecodec/ANR-11-LABX-0047] and the Fondation HEC [Budget F]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.01974 .