Working Paper: CEPR ID: DP16489
Authors: Clément Bellet; Dylan Glover; Mark Stabile
Abstract: Understanding attitudes towards inequality among the ``working rich" matters for any policy aimed at increasing the level of redistribution in society. We investigate this question using a unique sample of nearly 1,000 graduates from a highly ranked MBA program and a representative sample of Americans. We first show that high-earning MBAs are far more likely to know their rank in the income distribution. We then explore whether and how comparisons with peers or others (i.e. reference groups) shape their preferences for redistribution. Asking them to rank within their family, colleagues or classmates leads to an average 18\% drop in the income share allocated to the richest 1\% but has no discernible effect on their taxation preferences. We discuss the respective contribution of the comparative and normative functions of reference groups as potential mechanisms.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Activating reference groups among high-earning MBAs (C92) | Significant decrease in the income share allocated to the richest 1% (D33) |
| Significant decrease in the income share allocated to the richest 1% (D33) | More equitable income distribution preference (D63) |
| Activating reference groups among high-earning MBAs (C92) | No effect on taxation preferences (H29) |
| Treated MBAs are more likely to attribute financial success to luck rather than effort (D29) | Normative channel effect (D85) |
| Comparative channel does not significantly influence MBA sample's perception of their national rank (P59) | Less influence by local comparisons (C52) |
| Reference group salience affects redistributive preferences among high earners (H23) | No significant changes in tax policy preferences (H29) |