NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Reference Points and Redistributive Preferences: Experimental Evidence

Jimmy Charité, Raymond Fisman, Ilyana Kuziemko

NBER Working Paper No. 21009
Issued in March 2015
NBER Program(s):Public Economics, Political Economy

If individuals evaluate outcomes relative to the status quo, then a social planner may limit redistribution from rich to poor even in the absence of moral hazard. We present two experiments suggesting that individuals, placed in the position of a social planner, do in fact respect the reference points of others. First, subjects are given the opportunity to redistribute unequal, unearned initial endowments between two anonymous recipients. They redistribute significantly less when the recipients know the initial endowments (and thus may have formed corresponding reference points) than when the recipients do not know (when we observe near-complete redistribution). Subjects who are themselves risk-seeking over losses drive the effect, suggesting they project their own loss-aversion onto the recipients. In a separate experiment, respondents are asked to choose a tax rate for someone who (due to luck) became rich either five or one year(s) ago. Subjects faced with the five-year scenario choose a lower tax rate, indicating respect for the more deeply embedded (five-year) reference point. Our results thus suggest that respect for reference points of the wealthy may help explain why voters demand less redistribution than standard models predict.

download in pdf format
   (488 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w21009

Users who downloaded this paper also downloaded* these:
Gimpelson and Treisman w21174 Misperceiving Inequality
Kuziemko, Norton, Saez, and Stantcheva w18865 How Elastic Are Preferences for Redistribution? Evidence from Randomized Survey Experiments
Andreoni and Serra-Garcia w22824 Time-Inconsistent Charitable Giving
Kuziemko, Buell, Reich, and Norton w17234 "Last-place Aversion": Evidence and Redistributive Implications
Fisman, Jakiela, and Kariv w20146 How Did Distributional Preferences Change During the Great Recession?
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us