Inequality of Opportunity and Income Redistribution
We examine how redistribution decisions respond to the source of luck when there is uncertainty about its role in determining opportunities and outcomes. We elicit redistribution decisions from a representative U.S. sample who observe worker outcomes and whether luck could determine earnings directly (``lucky outcomes'') or indirectly by providing one of the workers with a relative advantage (``lucky opportunities''). We find that participants redistribute less and are less responsive 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. These findings have implications for models of redistribution attitudes and help explain the gap between lab evidence on support for redistribution and inequality trends.
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