How do the rich think about redistribution?
Presenter
School of Information, University of Michigan
Time and location
North Quad 4330, Thursday (1:00-2:00) pm
Abstract
Wealthy individuals have a disproportionate influence on politics and firms. We study attitudes toward income redistribution using a large sample of wealthy Americans (top 5% based on income or financial assets). Compared to a sample representative of the bottom 95%, individuals in the top 5% are less supportive of redistribution as they favor lower taxes and were more likely to vote for Donald Trump in the 2016 presidential election. We find that this gap in attitudes is explained by preferences for inequality rather than beliefs about inequality. For beliefs about the sources of inequality, we find that the top 5% and bottom 95% hold similar opinions about the role of effort versus luck as determinants of success in life. For preferences towards unequal outcomes, we conducted an experiment where participants could redistribute earnings between pairs of workers. Compared to the bottom 95%, the top 5% redistribute less from high- to low-income workers and especially so when inequality is due to luck. Furthermore, this gap in distributional preferences is largely driven by individuals who acquired wealth over their lifetime rather than those who were born into wealth. Our findings raise the possibility that wealthy individuals who experienced upward social mobility contribute to the persistence of income inequality in the U.S.