A large body of survey research offers evidence that citizens are not always fully aware of the economic and political realities in their respective countries. Norton and Ariely (2011) extended this research to the domain of wealth inequality, showing that Americans were surprisingly unaware of the shape of the wealth distribution in America. Using an alternative methodology, Eriksson and Simpson (2012) found that asking Americans to estimate the average wealth of quintiles, rather than the percent of wealth owned by each quintile, led to relatively more accurate estimates. We note, however, that the Eriksson and Simpson (2012) results do not challenge Norton and Ariely’s (2011) conclusion that Americans desire a much more equal distribution of wealth.

Four experiments examine the impact of a firm deciding to no longer pay salaries for executives versus employees on consumer behavior, particularly in the context of the COVID-19 pandemic. Study 1 explores the effect of announcing either pay cessations or continued pay for either CEO or employees, and shows that firms’ commitment to maintaining employee pay leads to the most positive consumer reactions. Study 2 examines the effects of simultaneously announcing employee and CEO pay cessations: consumers respond most positively to firms prioritizing employee pay, regardless of their strategy for CEO pay. Moreover, these positive perceptions are mediated by perceptions of financial pain to employees, more than perceptions of CEO-to-worker pay ratio fairness. Study 3, using an incentive-compatible design, shows that firms’ commitment to paying employees their full wages matters more to consumers than cuts to executive pay, even when those executive pay cuts lead to a lower CEO-to-worker pay ratio. Study 4 tests our account in a non-COVID-19 context, and shows that consumers continue to react favorably to firms that maintain employee pay, but when loss is less salient, consumers prioritize cutting CEO pay and lowering the CEO-to-worker pay ratio. We discuss the implications of our results for firms and policymakers during economic crises.

Four experiments examine how lack of awareness of inequality affect behaviour towards the rich and poor. In Experiment 1, participants who became aware that wealthy individuals donated a smaller percentage of their income switched from rewarding the wealthy to rewarding the poor. In Experiments 2 and 3, participants who played a public goods game – and were assigned incomes reflective of the US income distribution either at random or on merit – punished the poor (for small absolute contributions) and rewarded the rich (for large absolute contributions) when incomes were unknown; when incomes were revealed, participants punished the rich (for their low percentage of income contributed) and rewarded the poor (for their high percentage of income contributed). In Experiment 4, participants provided with public education contributions for five New York school districts levied additional taxes on mostly poorer school districts when incomes were unknown, but targeted wealthier districts when incomes were revealed. These results shed light on how income transparency shapes preferences for equity and redistribution. We discuss implications for policy-makers.

Baumeister et al. propose that individual differentiation is a crucial determinant of group success. We apply their model to processes lying in between the individual and the group – vicarious processes. We review literature in four domains – attitudes, emotions, moral behavior, and self-regulation – showing that group identification can lead to vicarious contagion, reducing individual differentiation and inducing negative consequences.