Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264138 
Year of Publication: 
2022
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2022: Big Data in Economics
Publisher: 
ZBW - Leibniz Information Centre for Economics, Kiel, Hamburg
Abstract: 
This paper examines how people redistribute income when there is uncertainty about the role luck plays in determining opportunities and outcomes. We introduce a portable experimental method that generates exogenous variation in the probability that real workers' earnings are due to luck, while varying whether luck interacts with effort in the earning process. Then, we elicit redistribution decisions from a U.S.-nationally representative sample who observe worker outcomes and whether luck magnified workers' effort ("lucky opportunities") or determined workers' income directly ("lucky outcomes"). We find that participants redistribute less and are less reactive to changes in the importance of luck in environments with lucky opportunities. We show that individuals rely on a simple heuristic when assessing the impact of unequal opportunities, which leads them to underappreciate the extent to which small differences in opportunities can have a large impact on outcomes. Our findings have implications for models that seek to understand and predict attitudes toward redistribution, while helping to explain the gap between lab evidence on preferences for redistribution and real-world inequality trends.
JEL: 
C91
D63
Document Type: 
Conference Paper

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