Wealth Inequality and Endogenous Fairness Views

Abstract

The growth in wealth and income inequality in recent decades has sparked debate about the impact of inequality on economic efficiency and social stability. I present experimental evidence that makes an important contribution to this discussion by demonstrating a causal link between wealth inequality and fairness views. I show that fairness views are set endogenously as a function of one’s position in the wealth distribution. Moreover, both high- and low-wealth individuals exhibit a self-serving bias in their fairness views. These results have important implications for social cohesion as they suggest that inequality may create divergences in views between wealth classes.