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Overconfidence, Income-Ability Gap, and Preferences for Income Equality

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  • Daiki Kishishita
  • Atsushi Yamagishi
  • Tomoko Matsumoto

Abstract

The overconfident, who do not actually earn what they think they can, may attribute such cognitive gap to the unfairness of the economy and become favorable of public redistribution when they realize their cognitive bias. We conducted an online survey experiment in the US, where the treatment emphasizing each respondent's self-perception on the income-ability gap is randomly assigned. We found that the treatment lowers overconfident respondents' perception on the fairness of the economy among both left-wing and right-wing people. However, it did not increase the support for reducing income inequality. Instead, this increased support for government intervention to correct the unequal society among the leftists with high trust in the US government.

Suggested Citation

  • Daiki Kishishita & Atsushi Yamagishi & Tomoko Matsumoto, 2021. "Overconfidence, Income-Ability Gap, and Preferences for Income Equality," Working Papers e159, Tokyo Center for Economic Research.
    • Handle: RePEc:tcr:wpaper:e159
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    More about this item

    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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