Behavioural Economics Beliefs about Behavioral Responses to Taxation
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Abstract
We conduct an experiment to study how beliefs about behavioral responses to taxation and preferences over equality–e iciency trade-o s relate to the political disagreement on redistribution. We use a novel method to elicit incentivized beliefs from a sample of 13,900 Americans about how taxes a ect people’s e ort choices, and we elicit incentivized equality–e iciency preferences. We find that Democrats and Republicans have virtually identical beliefs about behavioral responses to taxation. Furthermore, we find that beliefs about behavioral responses to taxation fail to predict people’s support for equalization of incomes in society. Equality– e iciency preferences, by contrast, strongly predict both people’s political a iliation and their support for equalization of incomes in society. We also explore the role of motivated beliefs and identity politics by priming respondents about the political disagreement on redistribution. The treatments increase political polarization in preferences, but do not polarize beliefs. Our findings suggest that the political divide on redistribution relates more to people’s preferences than to their beliefs about the behavioral responses to taxation. (JEL C91, D83, H20) ∗A iliation of all authors: Department of Economics, NHH Norwegian School of Economics. E-mails: Alexander.Cappelen@nhh.no, Ingar.Haaland@nhh.no, and Bertil.Tungodden@nhh.no. We would like to thank Alberto Alesina, Roland Bénabou, Edward Glaeser, Olof Johansson-Stenman, David Laibson, Ma hew Rabin, Christopher Roth, Rupert Sausgruber, Andrei Schleifer, Klaus Schmidt, Daniel Schunk, Stefanie Stantcheva, Ma hias Su er, Guido Tabellini, Jean-Robert Tyran, Jonas Tungodden, and numerous seminar and conference participants for their helpful comments and discussions. This work was partially supported by the Research Council of Norway through its Centres of Excellence Scheme, FAIR project No 262675. The experiment is registered in the AEA RCT Registry as trial 2186. The usual disclaimer applies.