Seminar “Experiments on Inequality and Redistribution” Winter 21/22
There are many topics in quantitative economics. The seminar by Cornelius Schneider will focus on fairness and redistribution.
Online teaching
The seminar will be offered online. Each week we will have a regular seminar meeting where participants present and discuss.

Teaching needs a stable and reliable environment. We must commit in time to a predictable format that works well for you under many forseeable conditions. Following erratic changes of daily political assessments does not improve quality.

For this course online teaching seems to worked rather well. Online presentations and online discussions of your research are becoming more and more important. In this seminar you will learn to carry out independent research. You will also train your online presentation skills.

Learning aims:
During the seminar participants will learn to
  • formulate their own research question,
  • develop a laboratory experiment designed to answer this question,
  • conduct this experiment with other seminar participants as a pilot,
  • analyze the collected data,
  • present their results as a talk, as a poster, and as a written essay.
Language:
The language for this seminar will be English.
Schedule
The first meeting will be on Thursday, 21.10., 14-16. We will then find a time that meets the needs of all participants.
Topic
This seminar offers an introduction to the current topics in experimental economics on fairness views and the (resulting) demand for redistribution. A particular focus will be on the experimental methods applied in this context. By the end of the seminar, you will be asked to present an original research idea and sketch out your own research design.

The growing income and wealth inequality during the past decades revealed limitations of classic political-economic frameworks. The seminal model of Meltzer and Richard (1981), for example, predicts how increased inequality should be held in check in democracies: the median voter would demand more redistribution if top income shares become too concentrated. However, the trend of rising inequality continues, and support for redistributive policies remains limited.

Against this background, a fairly new strand of literature exploits experiments to offer a more nuanced and empirically grounded perspective on the evolution of redistributive preferences. The assumption of selfish, income maximizing individuals seems too short sighted: empirical findings have proven how individuals are willing to sacrifice their own economic benefits to reduce inequalities. On the other hand, there are also mechanisms leading individuals to accept inequalities, even if they themselves would benefit from redistribution. These are, for example, hardwired normative judgements (e.g. egalitarian vs. libertarian fairness views), different beliefs about the source of wealth (luck vs. effort) or different concerns about the efficiency costs of redistribution.

The main objectives of the course are twofold. First, the seminar will provide an overview on current empirical facts – and myths – on how fairness views are shaped and preferences for redistributive policies evolve. Second, the papers discussed in the context of preferences for redistribution will illustrate empirical methods for the causal identification of new, scientifically sound insights. The final goal is to present an own research idea with a brief sketch of an original experimental design. Accordingly, this course will be structured in two parts:

  1. Overview + Experimental Methods

    In the first part, we will jointly develop an overview of the central questions raised in the field of fairness views and preferences for redistribution. We will start on fairness views on the individual level and then proceed to the public level. What are the key determinants that eventually shape redistributive policies? As a byproduct, we will compile an overview on basic experimental settings that are able to causally address the questions raised. In this part, you are required to prepare a presentation about 1) each prominent mechanism in the field of fairness views and redistribution; and 2) a specific experimental method.

  2. Own Experiment

    After diving into the topic and its experimental methods, you will be asked to get creative. In this second part, you present your own research idea – which ideally connects to one of the questions discussed in the first part. Finally, you will develop an own original research design, suitable to answer your research question. Participants will then present their progress on the design of their own experiment.

Preparation
Please (briefly) browse through the literature provided below to already have an initial idea about the central questions in experimental economics of fairness views and redistribution. What are the key determinants shaping redistributive policies? In the first session we will start developing a taxonomy of areas. Based on this, the presentation topics for the subsequent sessions will be assigned.
Course Requirements, Assignments and Grading
Participants should have a solid background and interest in empirical work and statistics, with (at least) basic knowledge of the linear regression model (OLS).

Grading will be based on:

  • Course participation
  • Presentations
  • Short final essay (about 4 pages)
Related Literature
  • Alesina, A., Stantcheva, S., & Teso, E. (2018). Intergenerational mobility and preferences for redistribution. American Economic Review, 108(2), 521-54.
  • Alesina, A., & Angeletos, G. M. (2005). Fairness and redistribution. American Economic Review, 95(4), 960-980.
  • Almås, I., Cappelen, A. W., & Tungodden, B. (2020). Cutthroat capitalism versus cuddly socialism: Are Americans more meritocratic and efficiency-seeking than Scandinavians?. Journal of Political Economy, 128(5), 1753-1788.
  • Benabou, R., & Ok, E. A. (2001). Social mobility and the demand for redistribution: the POUM hypothesis. The Quarterly Journal of Economics, 116(2), 447-487.
  • Cappelen, A. W., Falch, R., & Tungodden, B. (2020). Fair and Unfair Income Inequality. Handbook of Labor, Human Resources and Population Economics, 1-25.
  • Cappelen, A. W., Hole, A. D., Sørensen, E. Ø., & Tungodden, B. (2007). The pluralism of fairness ideals: An experimental approach. American Economic Review, 97(3), 818-827.
  • Cruces, G., Perez-Truglia, R., & Tetaz, M. (2013). Biased perceptions of income distribution and preferences for redistribution: Evidence from a survey experiment. Journal of Public Economics, 98, 100-112.
  • Fisman, R., Jakiela, P., & Kariv, S. (2017). Distributional preferences and political behavior. Journal of Public Economics, 155, 1-10.
  • Karadja, M., Mollerstrom, J., & Seim, D. (2017). Richer (and holier) than thou? The effect of relative income improvements on demand for redistribution. Review of Economics and Statistics, 99(2), 201-212.
  • Konow, J. (2001). Fair and square: the four sides of distributive justice. Journal of Economic Behavior & Organization, 46(2), 137-164.
  • Kuziemko, I., Norton, M. I., Saez, E., & Stantcheva, S. (2015). How elastic are preferences for redistribution? Evidence from randomized survey experiments. American Economic Review, 105(4), 1478-1508.
  • Weinzierl, M. (2014). The promise of positive optimal taxation: normative diversity and a role for equal sacrifice. Journal of Public Economics, 118, 128-142.