Overconfidence, Income-Ability Gap, and Preferences for Income Equality

38 Pages Posted: 18 Feb 2021 Last revised: 27 Apr 2021

See all articles by Daiki Kishishita

Daiki Kishishita

School of Management, Tokyo University of Science

Atsushi Yamagishi

Princeton University, Department of Economics

Tomoko Matsumoto

Tokyo University of Science

Date Written: January 29, 2021

Abstract

Overconfident people who do not earn what they think they can may attribute this cognitive gap to the unfairness of the economy and thereby favor public redistribution when they realize their cognitive gap. We conducted an online survey experiment in the US in which we assigned the treatment emphasizing each respondent's self-perception of the income-ability gap randomly. We found that the treatment lowers overconfident respondents' perception of the fairness of the economy among both left- and right-wing people. However, it did not increase the support for reducing income inequality. Instead, it increased support for government intervention to correct inequality among leftists with high trust in the US government.

Keywords: Preferences for redistribution, Overconfidence, Political ideology, Political distrust, Meritocracy

JEL Classification: D31, D72, H23, H24

Suggested Citation

Kishishita, Daiki and Yamagishi, Atsushi and Matsumoto, Tomoko, Overconfidence, Income-Ability Gap, and Preferences for Income Equality (January 29, 2021). Available at SSRN: https://ssrn.com/abstract=3775304 or http://dx.doi.org/10.2139/ssrn.3775304

Daiki Kishishita (Contact Author)

School of Management, Tokyo University of Science ( email )

Tokyo
Japan

Atsushi Yamagishi

Princeton University, Department of Economics ( email )

Princeton, NJ
United States

Tomoko Matsumoto

Tokyo University of Science ( email )

1-3 Kagurazaka
Tokyo, 162-8601
Japan

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