Redistributive Politics with Target-Specific Beliefs (12:30-13:45)

Category: Applied Microeconomics and Organization Seminar , Management & Microeconomics Brown Bag Seminar
When: 16 May 2019
, 12:15
 - 13:45


Forty-two percent of Americans give different answers when asked, respectively, about the reasons for being rich and the reasons for being poor. We develop and test a theory about support for redistribution in the presence of target-specific beliefs about the causes of low and high incomes. Our theory predicts that target-specific beliefs about the poor matter most for preferences about transfers to the poor, and target-specific beliefs about the rich matter most for preferences about taxation of the rich. Survey evidence from the United States and Germany and experimental evidence on giving money to real welfare recipients supports our theory. We also find, in theory, the existence of a moral release equilibrium in which the rich choose high taxes on lower income classes to discourage effort and create an unworthy poor class, thereby escaping moral pressure to support the poor.