Perceived Inequality, Reference Groups and Preferences for Redistribution Among High Earners
SeriesBrown Bag Seminars General Economics
Date and time
February 17, 2022
12:00 - 13:00
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. Our survey experiment shows that (1) high-earning individuals are far more likely to know their rank in the income distribution and that (2) comparisons with peers or others (i.e. reference groups) 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 comparative and normative functions of reference groups as potential mechanisms.