John Stuart Mill claimed that “men do not desire merely to be rich, but richer than other men.” Are people made happy by being richer than others? Or are people made happy by favorable comparisons to others more generally, and being richer is merely a proxy for this ineffable relativity? We conduct an online experiment absent choice in which we measure subjective well-being (SWB) before and after an exogenous shock that reveals to subjects how many experimental points they and another subject receive, and whether or not points are worth money. We find that subjects are made significantly happier when they receive monetized rather than non-monetized points, suggesting money is valued more than the points it represents. In contrast, subjects are made equally unhappy when they receive fewer monetized points as when they receive fewer non-monetized points than others, suggesting relative money is not valued more than the relative points it represents. We find no evidence that subjects are made happier by being “richer” than others (i.e., by receiving more points—either monetized or non-monetized—than others). Subgroup analyses reveal women are made unhappier (than men) by being “richer” and “poorer” than others, and conservatives are made unhappier (than progressives) by being “poorer” than others. Our experimental-SWB approach is easy to administer and may complement choice-based tasks in future experiments to better estimate preference parameters.

Preferences over social ranks have emerged as potential drivers of weaker than expected support for redistributive interventions among those closest to the bottom of the income distribution. We compare preferences for alterations of the income distribution affecting the decision maker’s social rank, but not their income, and compare them with similar alterations leaving both rank and income unchanged. Our study fails to find evidence of last-place aversion in a replication of Kuziemko et al. (Q J Econ 129(1):105–149, 2014). However, using a modified design that holds ranks fixed across rounds we find support for both a discontinuously greater disutility from occupying the last as opposed to higher ranks, thus affecting only those closest to the bottom of the distribution, and for a general dislike of rank reversals affecting most ranks. We discuss implications for policy design in both public finance and management science.

Previous literature demonstrates that beliefs about the determinants of income inequality play a major role in individual support for income redistribution. This study investigates how people form beliefs regarding the extent to which work versus luck determines income inequality. Specifically, I examine whether people form self-serving beliefs to justify supporting personally advantageous redistributive policies. I use a laboratory experiment where I directly measure beliefs and manipulate the incentives to engage in self-deception. I first replicate earlier results demonstrating that (1) people attribute income inequality to work when they receive a high income and to luck when they receive a low income and (2) their beliefs about the source of income inequality influence their preferences over redistributive policies. However, I do not find that people’s beliefs about the causes of income inequality are further influenced by self-serving motivations based on a desire to justify favorable redistributive policies. I conclude that, in my experiment, self-serving beliefs about the causes of income inequality are driven primarily by overconfidence and self-image concerns and not to justify favorable redistributive policies.

We conduct two experiments using a demographically diverse online subject pool to investigate total and extensive price elasticities of giving by age, income, gender, political ideology, and religiosity. A first exploratory experiment finds that religious subjects give more, are more likely to give, and are less sensitive to the price of giving than non-religious subjects. We find no statistically significant differences in price elasticities by age, income, gender, or political ideology. A second pre-registered experiment confirms these findings.

This paper explores whether a positive unexpected exogenous (unearned) wealth shock affects household structure decisions in different Spanish regions. The Christmas draw of the Spanish National Lottery is used in a natural experiment as a proxy for exogenous random variations in provincial wealth. A static and dynamic linear panel event-study design allows for control of changing economic and demographic conditions at the province level and the dynamic effects on the analyzed decisions. The evidence is consistent with families getting divorced and having children when the province in which they live experiences an unexpected increase in wealth, but no conclusive effect on wedding plans is found.

This study examines the degree of educational assortative mating, its evolution, and its relationship with income inequality in Thailand using national labor force survey data from 1985 to 2016. Since the 1990s, Thailand shows a trend of decreasing educational homogamy, but there is evidence of continuing educational hypergamy in Thai households. Using the semiparametric decomposition method of DiNardo, Fortin and Lemieux (1996), the study finds that educational assortative mating has affected changes in household income inequality over time. Furthermore, there exists a negative relationship between income inequality and marital sorting with same education, which contradicts evidence found in developed countries.

We examine the effect of the partner allowance (PA) in the Dutch pension system on the retirement decisions of couples using administrative data. PA was paid to people who receive the public old-age pension with a partner younger than the state pension age (SPA) and with a low own income. PA worked as a financial incentive to retire earlier, especially for the younger partners. As of 1 April 2015, new old-age pensioners are no longer entitled to this allowance. We estimate the effect of this reform on the retirement behaviour of each spouse. To account for the fact that at the same time, another reform essentially put an end to generous early retirement arrangements, we compare singles and couples. We conclude that PA substantially increased female younger partners' probabilities to exit from part-time employment into retirement close to the older partner's SPA. On the other hand, there is no evidence that male younger partners (either full-time or part-time workers) responded to the PA reform. In addition, PA increased male older partners’ probabilities to retire in the years before reaching their SPA.

The use of a gender-neutral annuity divisor introduces an intra-generational redistribution from short-lived towards long-lived individuals; this entails a transfer of wealth from males to females and from low socioeconomic groups to high socioeconomic groups. With some subpopulations consisting of females from low socioeconomic groups (or males from high groups), the net effect of the redistribution is unclear. The study aims to quantify the lifetime income redistribution of a generic NDC system using two types of divisor – the demographic and the economic – to compute the amount of an initial pension. With this in mind, the redistribution (actuarial fairness) among subpopulations is assessed through the ratio between the present value of expected pensions received and contributions paid. We find that all subgroups of women and men with high educational attainment benefit from the use of the unisex demographic divisor. This paper also shows that the value of the economic divisor depends markedly on population composition. When mortality differentials by gender and level of education are considered, economic divisors are mostly driven by the longevity effect corresponding to gender.

Equity and efficiency are crucial issues behind any tax reform, but they are particularly relevant in countries with high inequality and large shares of poverty. This paper provides a comprehensive socio-economic empirical assessment of Mexico's proposed (and partially implemented) tax reforms in the energy domain, and of a hypothetical partial removal of existing electricity subsidies. Using a rich household income and expenditure survey within the context of a demand system adjustment of non-durable goods, the article provides the public-revenue, environmental and distributional impacts from the simulation of different combinations of energy taxation, subsidy-removal and distributive offsets. The paper also provides detailed ex-ante evidence on the effects of compensatory devices that may contribute to the successful implementation of energy reform packages and significant poverty alleviation in Mexico.

We study how the work effort and output of non-migrants in a village economy are affected when a member of the village population migrates. Given that individuals dislike low relative income, and that migration modifies the social space of the non-migrants, we show why and how the non-migrants adjust their work effort and output in response to the migration-generated change in their social space. When migration is negatively selective such that the least productive individual departs, the output of the non-migrants increases. While as a consequence of this migration statically calculated average productivity rises, we identify a dynamic repercussion that compounds the static one.

Studies show that the gain from China's remarkable growth of the past 35 years has not been evenly shared, especially through the intergenerational transmission of income. To address this concern, we use data from China Health and Nutrition Survey and find the intergenerational income elasticity to be 0.466 in 2011, which suggests that sons’ incomes are affected by their fathers’ economic statuses to a large extent. A cross-country comparison indicates that the degree of generational income mobility in China is lower than that in many developed nations. Meanwhile, by investigating possible transmission channels, we find that the fathers’ investments in the sons’ education and occupation play substantial roles in intergenerational transmission of income. The results not only demonstrate the trends in intergenerational income mobility in China, but also identify the most likely transmission channels, which is of great importance to improving social equality.

Over the last few years, the idea that some of the central problems of Latin American development are a consequence of the excessive power of the elites has regained influence. Nevertheless, this neoinstitutionalist approach has been criticized because of its excessive determinism and the fact that it doesn’t pay enough attention to the periods when elite’s power was eroded. The present paper analyzes one of these cases, which occurred in Chile between 1913 and 1973. The income share of the top 1% is used as a proxy for the elite’s power. New quantitative evidence on incomes for different groups –the 1% and wage earners– is integrated into an analytic narrative on the conflictive relation between the elite and other political and social actors.

Les mesures d'inégalité du revenu rassemblent deux types d'indicateurs décomposables : les indices décomposables en sous-populations et les indices décomposables en sources de revenu. Les premiers permettent de partager l'inégalité totale en une inégalité intragroupe et une inégalité intergroupe et les seconds d'attribuer à chaque facteur de revenu (revenu du travail, revenu du capital, taxes, etc.) une part de l'inégalité totale. Dans cet article, nous examinons d'une part la construction de ces techniques et d'autre part nous relatons les débats auxquels elles ont aboutis et plus particulièrement celui de la convergence vers un emploi simultané des deux types de décomposition.