February 09, 2023
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Posted by NCID
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Anna Hochleitner (University of Nottingham) visited NCID to give a seminar entitled “Fairness in times of crisis: Negative shocks, relative income, and preferences for redistribution.”

Her paper studies how adverse income shocks and relative income differences affect redistribution preferences. Hochleitner claims that “the motivation for this project came from observing that over the last years, we’ve seen a lot of public and political debates surrounding inequality and fairness. So, the question I was asking myself is maybe these times of crisis not only lead to an increased concern or saliency of these topics but maybe to a general shift in how people view fairness and redistribution.”

Not everyone is affected equally by a crisis. In particular, the poor demand much higher redistribution levels than the rich. According to Hochleitner, “only the rich people respond to income shocks, and they do so in the following way: If they affect themselves by a shock and then they become more selfish and are willing to redistribute less towards the poor, but if they learn that it`s mainly the poor that are affected, and then they become more generous and are willing to redistribute more.”

Depending on who`s affected by a crisis, this may generate barriers or opportunities for redistribution. Her research details that there are similar patterns meaning that people take both their own and other shocks into account, becoming more selfish after a shock to self and more generous after a shock to the other person: “Overall, what the study shows is that people care a lot about whether someone is relatively rich or poor and also changes in income met a lot for how people view questions of redistribution.”