Why Do the Rich Oppose Redistribution? An Experiment with America’s Top 5%
- Working Paper
- Sustainable & Impact Investing
By Alain Cohn, University of Michigan; Lasse J. Jessen, University of Kiel - Faculty of Economics and Social Sciences; Marko Klasnja, New York University; Paul Smeets, Maastricht University
Wealthy individuals have a disproportionate influence on politics and firms. We study attitudes toward redistribution of a large sample of the top 5% in the U.S. in terms of income and financial assets, and find that they prefer less redistribution than a representative sample of the bottom 95%. The differences in tax attitudes and political views can be largely attributed to differences in distributional preferences, which we measured in an experiment where choices affected the pay of pairs of workers in a real-effort task. Wealthy Americans redistribute less to the low-income worker, thus accepting more inequality than the rest of the population. The gap in distributional preferences is primarily driven by individuals who acquired wealth over their lifetime rather than those who were born into wealth. Our findings raise the possibility that wealthy individuals contribute to the persistent income inequality in the U.S.