Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/199071
Authors: 
Fong, Christina
Poutvaara, Panu
Year of Publication: 
2019
Series/Report no.: 
ifo Working Paper No. 297
Abstract: 
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 theo-ry 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 ex-istence 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 escap-ing moral pressure to support the poor.
Subjects: 
redistribution
fairness
taxation
political economy
moral release equilibrium
target-specific beliefs
JEL: 
D63
D72
H21
H24
Document Type: 
Working Paper

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