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Income Perception, Information, and Progressive Taxation: Evidence from a Survey Experiment*

  • José Fernández-Albertos and Alexander Kuo
Abstract

Are individuals accurately informed about their place in the income distribution? Despite the importance of accurate information about one’s placement in the income distribution for many models of redistribution, this assumption remains untested. We present survey data and an embedded experiment where we inform some individuals their true place in the income distribution. We then assess the impact of such information on tax progressivity preferences. We find that individuals have considerable error regarding their self-placement in the income distribution. Revealing to individuals their true placement affects progressivity preferences for individuals who learn they are poor, and for individuals whose prior is that they are poor. These results have implications for information assumptions of redistribution models of comparative political economy and contribute to our understanding of tax preferences, an understudied dimension of redistribution preferences.

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José Fernández-Albertos is Permanent Research Fellow (Científico Titular) at the Institute for Policies and Public Goods (IPP) of the Spanish National Research Council (CSIC), Calle Albasanz, 26–28 Madrid 28037, Spain. Alexander Kuo, Assistant Professor, Department of Government, Cornell University, 214 White Hall, Ithaca, NY 14850 (agk72@cornell.edu). Previous versions of the paper were presented at the Annual Meetings of the Midwest Political Science Association, European Political Science Association, Council for European Studies, and American Political Science Association. The authors thank Aina Gallego, Jona Linde, Karen Long Jusko, Peter John Loewen, John Sides, three anonymous reviewers, and the editor, for very helpful comments on this paper. Fernández-Albertos acknowledges financial support from the Spanish Ministry for the Economy and Competitiveness, project reference no. CSO2013-48451-R. The authors also thank Modesto Escobar Mercado and the University of Salamanca for fielding the additional survey and providing supplemental data. This latter survey was made possible by financial support from the 2008–2011 National Program Plan for Scientific Research, Development and Technological Innovation (I+ D+I) of the Spanish Ministry for the Economy and Competitiveness (project reference no. CSO2011-27005). To view supplementary material for this article, please visit http://dx.doi.org/10.1017/psrm.2015.73

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