Abstract: Research shows that individuals’ preference to redistribute depends on the source of inequality. In this paper, I causally show that merit affects redistribution decisions even when it is not the source of inequality. I conduct an online experiment using a modified worker–spectator design in which the source of inequality is exogenously determined and known to spectators. I vary the information spectators receive about workers’ performance in a real-effort task. I find that merit affects redistribution decisions even when inequality is generated by luck, and that its effect is more pronounced than the effect of luck. These findings indicate that merit functions as a normative benchmark in evaluating inequality, independent of its causal role in producing it. As a secondary contribution, I examine workers’ beliefs about spectators’ decisions and their effort responses to merit- and luck-based redistribution. I find that workers systematically underestimate the importance of merit in spectators’ decisions.
PEER-REVIEWED PUBLICATION
Abstract: We revisit two fundamental motivations of dishonesty: financial incentives and probability of detection. We use an ability-based real effort task in which participants who are college students in India can cheat by over reporting the number of puzzles they could solve in a given period of time. The puzzles are all unsolvable and this fact is unknown to participants. This design feature allows us to obtain the distribution of cheating outcomes at the individual level. Controlling for participant attributes, we find that introducing piece-rate financial incentives lowers both the likelihood and magnitude of cheating only for individuals with a positive probability of detection. On the other hand, a decrease in the probability of detection to zero increases magnitude of cheating only for individuals receiving piece-rate incentives. Moreover, we observe that participants cheat significantly even in the absence of piece-rate incentives indicating that affective benefits may determine cheating. Finally, an increase in own perceived wealth status vis-à-vis one’s peers is associated with a higher likelihood of cheating while feeling more satisfied with one’s current economic state is associated with a lower magnitude of cheating.
Unequal Opportunity, Mobility and Redistribution
Abstract: How does the presence of one type of redistributive policy affect the support for another? In this paper, I use an online experiment to examine how provision of mobility opportunity for the disadvantaged affect individuals' support for income redistribution. Specifically, I consider two types of criteria that is used for selecting recipients of mobility opportunity, i.e., merit and luck and test how the different selection criteria affects support for redistribution. I use a new modification of the worker-spectator design to answer my research question. In this experiment, I randomly assign positions of advantage and disadvantage to workers in a pair depending on the version of task (i.e., easy or difficult) they get paid for. Further, I introduce an upward mobility opportunity for only the disadvantaged type of worker. As an impartial observer, each spectator makes redistributive decisions for various scenarios that differ by whether the disadvantaged worker qualified by merit or luck to receive the upward mobility and how the disadvantaged worker performed after receiving the mobility opportunity relative to the ex-ante advantaged worker. I hypothesize that when the selection criteria for giving mobility opportunity is merit, then spectators would prefer to redistribute less as compared to when the selection criteria is based on luck. If my results support the hypothesis, it would suggest that in comparison to luck-based opportunities, merit-based opportunities tend to hurt the disadvantaged further.