Abstract
Previous literature demonstrates that beliefs about the determinants of income inequality play a major role in individual support for income redistribution. This study investigates how people form beliefs regarding the extent to which work versus luck determines income inequality. Specifically, I examine whether people form self-serving beliefs to justify supporting personally advantageous redistributive policies. I use a laboratory experiment where I directly measure beliefs and manipulate the incentives to engage in self-deception. I first replicate earlier results demonstrating that (1) people attribute income inequality to work when they receive a high income and to luck when they receive a low income and (2) their beliefs about the source of income inequality influence their preferences over redistributive policies. However, I do not find that people’s beliefs about the causes of income inequality are further influenced by self-serving motivations based on a desire to justify favorable redistributive policies. I conclude that, in my experiment, self-serving beliefs about the causes of income inequality are driven primarily by overconfidence and self-image concerns and not to justify favorable redistributive policies.
Highlights
Income inequality has increased almost everywhere over the past few decades (World Inequality Report, 2018)
Previous literature demonstrates that beliefs about the determinants of income inequality play a major role in individual support for income redistribution
The results indicate that people who are less inclined to support redistribution are more likely to believe that income is due mainly to work
Summary
Income inequality has increased almost everywhere over the past few decades (World Inequality Report, 2018). Rising inequality is a concern, as it is negatively associated with long-term growth and creates social problems
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