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):   PE   POL

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.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w21009

Users who downloaded this paper also downloaded* these:
Kuziemko, Norton, Saez, and Stantcheva w18865 How Elastic Are Preferences for Redistribution? Evidence from Randomized Survey Experiments
Gimpelson and Treisman w21174 Misperceiving Inequality
Kuziemko, Buell, Reich, and Norton w17234 "Last-place Aversion": Evidence and Redistributive Implications
Chetty w20928 Behavioral Economics and Public Policy: A Pragmatic Perspective
Alesina and Passarelli w21077 Loss Aversion in Politics
NBER Videos

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

Contact Us