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Fairness Preferences, Inequality Acceptance and Default Effects

Author

Listed:
  • Justin Valasek
  • Pauline Vorjohann
  • Weijia Wang
  • Justin Mattias Valasek

Abstract

An influential subset of the literature on distributional preferences studies how preferences condition on information about workers’ characteristics, such as their relative productivity. In this study we confirm that there are default effects when such conditional fair-ness preferences are measured using the “inequality acceptance” method. Depending on the default, implemented inequality decreases by over 65% and cross-country differences are not observed. To organize the data, we develop a simple framework in which agents form a reference point based on a combination of their conditional distributional preferences and the default. We use this framework to illustrate that choice data from different defaults is needed to separately identify distributional preferences and default effects, and discuss best practices for measuring fairness preferences.

Suggested Citation

  • Justin Valasek & Pauline Vorjohann & Weijia Wang & Justin Mattias Valasek, 2024. "Fairness Preferences, Inequality Acceptance and Default Effects," CESifo Working Paper Series 11288, CESifo.
    • Handle: RePEc:ces:ceswps:_11288
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp11288.pdf
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    References listed on IDEAS

    as
    1. Preuss, Marcel & Reyes, Germán & Somerville, Jason & Wu, Joy, 2022. "Inequality of Opportunity and Income Redistribution," VfS Annual Conference 2022 (Basel): Big Data in Economics 264138, Verein für Socialpolitik / German Economic Association.
    2. Mollerstrom, Johanna & Reme, Bjørn-Atle & Sørensen, Erik Ø., 2015. "Luck, choice and responsibility — An experimental study of fairness views," Journal of Public Economics, Elsevier, vol. 131(C), pages 33-40.
    3. Cohn, Alain & Jessen, Lasse J. & Klašnja, Marko & Smeets, Paul, 2023. "Wealthy Americans and redistribution: The role of fairness preferences," Journal of Public Economics, Elsevier, vol. 225(C).
    4. Santamaría, Diego & Miller, Luis & Ubeda, Paloma & Padilla-Angulo, Laura, 2023. "Determinants of inequality acceptability in a representative sample of the Spanish population," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 106(C).
    5. Lu Dong & Lingo Huang & Jaimie W Lien, 2022. ""They Never Had a Chance": Unequal Opportunities and Fair Redistributions," Discussion Papers 2022-11, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    inequality; fairness; inequality acceptance; distributional preferences; default effects; experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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