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Overconfidence, income-ability gap, and preferences for income equality

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  • Kishishita, Daiki
  • Yamagishi, Atsushi
  • Matsumoto, Tomoko

Abstract

Overconfident people who do not earn what they think they can may attribute this negative gap to the unfairness of the economy and thereby favor reducing income inequality when they realize their negative income-ability gap. To test this theory, we conducted an online survey experiment in the US in which we assigned the treatment emphasizing each respondent’s self-perception of the income-ability gap randomly. The results indicate that realizing this negative income-ability gap lowers respondents’ perception of the economy being meritocratic and fair. However, it did not translate into the higher support for reducing income inequality or the support for the government intervention. In addition, we examined the potential heterogeneity depending on political ideologies and political trust levels.

Suggested Citation

  • Kishishita, Daiki & Yamagishi, Atsushi & Matsumoto, Tomoko, 2023. "Overconfidence, income-ability gap, and preferences for income equality," European Journal of Political Economy, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:poleco:v:77:y:2023:i:c:s0176268022000775
    DOI: 10.1016/j.ejpoleco.2022.102279
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    More about this item

    Keywords

    Preferences for redistribution; Overconfidence; Political ideology; Meritocracy; Fairness;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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