I recently listened to a great audiobook by a UNC professor, Keith Payne, called The Broken Ladder: How Inequality Affects the Way We Think, Live, and Die. Rather than merely highlight, as much of the economics literature does, that income/wealth inequality is bad (if indeed the problem exists), this book goes into great depth into the precise psychological mechanism that might make inequality have the outcomes it may have.
I found one study the book mentions particularly interesting. Dr. Payne, with coauthors, had research participants play a game where they picked stocks. Regardless of the actual performance of their stock portfolios, some participants were told their performance was better than other participants, and some participants were told they did worse than others. In one part of the study, participants that were told their portfolio did well were asked, in future versions of the game (so they personally would not be hurt by the choice), “what percentage of earnings future high earners should be assessed, on a scale from 0% to 100%.” The randomly assigned participants who had been told their portfolios performed well “were significantly less supportive of redistribution in the game.” In other words, the researchers randomly assigned the perception of financial success, and those who thought they had succeeded were less likely to favor redistribution, even though it would not hurt them personally.
People like to think they are cause of their own success. This study shows that even when that is definitely not the case, people still like to assign themselves the credit, and, that translates into a taste for higher tax rates.
