Big Numbers
N-equality: Inequality increases with the number of allocation recipients
Stephen Garcia & Avishalom Tor
Journal of Personality and Social Psychology, forthcoming
Abstract:
We examine the equality preferences of resource allocators, finding that a ubiquitous situational factor -- the mere number of recipients (N) -- shapes the trade-offs these allocators make between their equality concerns and other considerations. Specifically, our studies offer evidence for an N-Equality effect: Third-party allocators become less concerned about inequality as the number of recipients increases. A pilot study illustrates the N-Equality effect with university faculty salaries, showing that the variance in faculty salaries increases with department size. Study 1 offers experimental evidence that allocators facing a trade-off between equality and the distributive principles of efficiency and equity give less weight to equality as the number of recipients increases, and supplemental experiments replicate the effect with different equality–efficiency trade-offs. Study 2 reveals the N-Equality effect in allocators’ choice that requires an equality–equity trade-off between low variance and high variance distributions. Studies 3a–c implicate the contribution of social comparison to the N-Equality effect, linking allocators’ preferences to their concerns over social comparison among recipients (Studies 3a and 3c) and showing this concern mediates the N-Equality effect (Study 3b). We conclude with implications for inequality research.
Privileged origins taint perceived authenticity
Lan Anh Ton, Rosanna Smith & Ernest Baskin
Journal of Experimental Social Psychology, November 2025
Abstract:
Although individuals have no control over what they are endowed with at birth, those from privileged origins, such as being born into wealth, are often viewed negatively. This article examines how information about an individual's privilege at birth influences assessments of their authenticity and what they create. We theorize that a privileged origin dilutes the connection between an individual and their creation by introducing attributional ambiguity as to whether the creation is a true reflection of the individual or due to the advantages from the privilege. This diluted connection lowers the individual's perceived authenticity and assessments of the creation. Across Studies 1 and 2, we find individuals born with high privilege, in the form of either wealth or beauty, are seen as less authentic than those born with low or moderate privilege, which decreases evaluations of what they create. Study 3 tested the attributional process underlying these decreased evaluations, finding that high privilege decreases attributions of the creation to the individual, lowering the individual's perceived authenticity. Study 4 showed that these effects persisted even when the high-privilege individual acknowledged their privilege. Study 5 revealed that these effects attenuate when the high-privilege individual possesses mixed privilege (i.e., high wealth but low beauty or low wealth but high beauty). These findings highlight the reputational challenge faced by individuals born into privilege and offer theoretical insight into the negative authenticity judgments associated with privileged origins.
A Dynamic Model of the Racial Wealth Gap
Sylvain Catherine, Ellen Jiayang Lu & James Paron
University of Pennsylvania Working Paper, July 2025
Abstract:
We study how disparities in economic factors contribute to the racial wealth gap between Black and White Americans through the lens of a life-cycle model. Although economic factors can explain differences in the composition of wealth, their overall effect on the wealth gap is often ambiguous and counter-intuitive. This is because, in a dynamic setting, consumption responds to offset the effects of both direct monetary costs and endogenous portfolio reallocations. Our results highlight the importance of considering dynamic effects in the study of wealth inequality between groups.
Robust Bounds on Optimal Tax Progressivity
Anmol Bhandari, Jaroslav Borovička & Yuki Yao
NBER Working Paper, September 2025
Abstract:
This paper studies optimal tax design when the cross-sectional distribution of types may be misspecified, and the government acts cautiously vis-à-vis these misspecifications. In models without such concerns, fat-tailed distributions imply positive -- often high -- top marginal tax rates. We demonstrate that even vanishingly small misspecification concerns overturn this finding, driving top marginal tax rates to zero. Calibrating concerns to observed variation in income distributions shows that taxes for below-average incomes remain essentially unchanged, while progressivity for high-income earners is substantially reduced.
Inequality acceptance in China: Fairness views, inequality beliefs, and policy attitudes in a socialist market economy
Ingvild Almås et al.
Journal of Economic Inequality, September 2025, Pages 623-636
Abstract:
Growing inequality poses a fundamental challenge to China’s socialist market economy. In a large-scale comparative study, we examine fairness views and beliefs about the source of inequality in China and compare them with those in two other major economies: the United States and Germany. We find that people in China consider hard work and talent much fairer sources of inequality than luck, and tend to believe that hard work and talent are much more important sources of inequality than luck. The fairness views and inequality beliefs of the Chinese are more similar to those of Americans than of Germans. In contrast, support for governmental redistribution is substantially higher in China than in the United States, comparable to the level of support observed in Germany. Our findings shed light on the challenging situation in China, characterized by high inequality and an underdeveloped welfare system, and underscore the need to balance increasing public demand for redistribution with the pursuit of market-oriented policies.
Homeownership, Polarization, and Inequality
Andrii Parkhomenko
Review of Economic Studies, forthcoming
Abstract:
Why are job polarization and income inequality higher in large U.S. cities? I offer a new explanation: when house prices grow faster in large cities, middle-income households increasingly cannot afford to own a house there. They move to smaller cities and the middle of the income distribution in large cities hollows out, making them more polarized and unequal. I document that (1) cities with higher price growth experienced larger polarization and increase in inequality since 1980 and (2) middle-income households migrate more often to cheaper locations for housing-related reasons than low- or high-income households. Using a spatial equilibrium model with tenure choice and skill heterogeneity, I find that excess growth of prices relative to incomes and rents in large cities accounts for nearly all of the gap in polarization and almost one-half of the gap in inequality growth between large and small cities from 1980 to 2019.
The Business Cycle Dynamics of the Wealth Distribution
Jesse Bricker et al.
Journal of Political Economy Macroeconomics, September 2025, Pages 343-381
Abstract:
We use new disaggregated household balance sheet measures to quantify the business cycle dynamics of the wealth distribution in the United States since 1989. After introducing these data and establishing their credibility, we show that wealth inequality is highly procyclical, mostly reflecting heterogeneous portfolio exposure to aggregate price risk, although group-specific asset return and saving dynamics also contribute. Furthermore, we show that positive house price shocks lower wealth inequality, while a positive shock to equity prices and unemployment causes inequality to increase, as do accommodative monetary policy shocks.
Universal basic income and the challenge of racialized opposition: Can economic self-interest overcome racial resentment?
Andrew Bloeser & Jesse Tomkiewicz
Politics, Groups, and Identities, forthcoming
Abstract:
White Americans with higher levels of racial resentment are among the most consistent opponents of social welfare policies for lower-income people because they perceive that these policies predominantly benefit black Americans. The universalist approach to social welfare offers a response to this racialized opposition that appeals to economic self-interest. This approach argues that greater public support is more likely when benefits are distributed more broadly and that racially resentful whites will be more inclined to support social welfare policies when they can directly benefit. The emergence of universal basic income (UBI) provides an opportunity to test this proposition. Using two nationally representative surveys and a survey experiment, we find evidence that economic self-interest can override racialized opposition among lower-income whites. However, we also find evidence that challenges the universalist argument. Racially resentful whites with higher incomes generally oppose UBI and UBI policies do not necessarily garner broader support than the policy most Americans associate with social welfare -- aid to the poor. We argue that these findings shed light on the endurance of racialized opposition to social welfare and why public support for UBI remains fragile.
The distinctive innovation patterns and network embeddedness of scientific prizewinners
Chaolin Tian et al.
Proceedings of the National Academy of Sciences, 7 October 2025
Abstract:
Science prizes purportedly reward innovation and explorations of new phenomena. Yet in practice, prizes may inadvertently divert resources from similarly impactful but less celebrated scholars. Despite this paradox, and even as prizes proliferate, knowledge of how prizewinning relates to innovation is nascent. Analyzing 2,460 worldwide prizes, we compared the innovativeness of over 23,000 prizewinners and matched nonprizewinners whose performance records were statistically equivalent up to the prize year. First, we find that prizewinners are more innovative. Their research is more likely to combine existing ideas in new ways, integrate a topic’s historical and contemporary thinking, and incorporate interdisciplinary perspectives. Second, although prizewinners and matched nonprizewinners have statistically equivalent impact and productivity records up to the prize year, at about five years before the prize, prizewinners’ papers become more innovative than their matched peers. This difference widens each year, peaks during the prize year, and then persists for the remainder of their careers. Third, network embeddedness predicts unusual innovativeness. Compared to nonprizewinners, prizewinners’ collaborations are shorter in duration, encompass wider exposure to unfamiliar topics, and involve coauthors whose networks minimally overlap with each other. The findings’ implications for innovation in science and the efficacy of reward systems and innovation in science are discussed.
Income Taxes and the Residential Mobility of Top Income Earners: Evidence from US and UK Households in Switzerland
Marko Koethenbuerger et al.
Economic Journal, forthcoming
Abstract:
We provide quasi-experimental evidence on the income tax-induced residential mobility of foreign high-income households living in Switzerland by exploiting the differential tax treatment of UK and US households. While the two groups are similar in terms of non-tax sorting preferences, US households are effectively insulated from Swiss income taxation due to the US world-wide income tax system. Thus, they provide the control group for the UK households, our treatment group. Comparing the residential choices of the two groups within a 45-minutes commuting zone of Zurich, we robustly find a residential location elasticity with respect to the net-of-tax rate of around eight. This estimate captures the ‘pure’ income tax effect on residential choice, not being downward biased by non-tax location incentives (that positively correlate with income taxes) and by coordination costs between job and residential choices, for instance.