3650 Rue McTavish
Montréal, QC H3A 1Y2
Michael Bechtel (Washington University)
Inequality and Redistribution Behavior
You can learn more about Professor Bechtel by clicking here.
Where and When: Friday, December 7, 2018 from 3:00 to 5:00pm. Ballroom, Thomson House, McGill University.
Abstract: Political polarization and extremism are widely thought to be driven by the surge in economic inequality in many countries around the world. Understanding why inequality persists depends on knowing the causal effect of inequality on individual behavior. We study how inequality affects redistribution behavior in a randomized “give-or-take” experiment that created equality, advantageous inequality, or disadvantageous inequality between two individuals before offering one of them the opportunity to either take from or give to the other. We estimate the causal effect of inequality in representative samples of German and American citizens (N=4,966) and establish two main findings. First, individuals imperfectly equalize payoffs: On average, respondents transfer 12% of the available endowments to realize more equal wealth distributions. This means that respondents tolerate a considerable degree of inequality even in a setting in which its removal would be feasible at zero costs. Second, redistribution behavior in response to disadvantageous and advantageous inequality is largely asymmetric: Individuals who take from those that are richer do not also tend to give to those that are poorer and individuals who give to those that are poorer do not tend to take from those that are richer. These behavioral redistribution types correlate in meaningful ways with support for heavy taxes on the rich and the provision of welfare benefits for the poor. Consequently, it seems difficult to construct a majority coalition willing to back the type of government interventions needed to counter rising inequality.
Video of the presentation:
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