Inequality and Redistribution Behavior in a Give-or-Take Game
Michael M. Bechtel, Roman Liesch, Kenneth F. Scheve
Proceedings of the National Academy of Sciences, 2018
Abstract
Political polarization and extremism are widely thought to be driven by the surge in economic inequality in many countries around the world. Understanding why inequality persists depends on knowing the causal effect of inequality on individual behavior. We study how inequality affects redistribution behavior in a randomized "give-or-take" experiment that created equality, advantageous inequality, or disadvantageous inequality between two individuals before offering one of them the opportunity to either take from or give to the other. We estimate the causal effect of inequality in representative samples of German and American citizens (n = 4,966) and establish two main findings. First, individuals imperfectly equalize payoffs: On average, respondents transfer 12% of the available endowments to realize more equal wealth distributions. This means that respondents tolerate a considerable degree of inequality even in a setting in which there are no costs to redistribution. Second, redistribution behavior in response to disadvantageous and advantageous inequality is largely asymmetric.
Key Finding
Individuals tolerate considerable inequality even without redistribution costs; those who take from the rich do not also give to the poor, and vice versa.
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Michael M. Bechtel, Roman Liesch, Kenneth F. Scheve (2018). Inequality and Redistribution Behavior in a Give-or-Take Game. Proceedings of the National Academy of Sciences. https://doi.org/10.1073/pnas.1714828115