The Impact of Our Experiences with Inequality on Redistributive Preferences

• In Event: Local Context, Personal Experience, and Redistributive Preferences

Abstract

Understanding the link between experiences of inequality and perceptions of inequality is important: What people believe about inequality affects whether they want redistribution. Previous studies have studied the link between experiences of inequality and redistribution, but it’s not clear how or why people’s experiences change their preferences. To unpack this process, I generate a Bayesian decision model where experiences of inequality act like a signal about the true state of the world. In the model, people make decisions about their preferred levels of redistribution based on their expected utility. Their expected utility depends both on their decision to redistribute and the state of the world. They have uncertain beliefs about the state of the world, but they receive a signal about this state from their personal experiences of income inequality. The accuracy of the signal varies in the model. This means it’s possible to make an error—if the signal you get misleads you, you’ll take an action that gives you less utility than you could have obtained. This mismatch between beliefs about inequality and actual inequality may explain why people don’t act in accordance with classic political economic models of redistribution, which predict that low income people will prefer more redistribution. To confirm this relationship between experiences and perceptions of inequality, I use a survey experiment where I prime subjects to think about their everyday experiences of inequality.

Author

• Daniella Alva, Lehigh University