Policy misperceptions, information, and the demand for redistributive tax reform: experimental evidence from Latin America

Why do individuals fail to support tax reforms that serve their material self-interest? Using an original online survey experiment spanning eight countries and 12,000 respondents across Latin America, one of the most unequal regions in the world, we find evidence for a previously unexplored explanation: misperceptions regarding the current incidence of the taxes to be reformed. Treated respondents who are informed that the value-added tax (VAT) is regressive are significantly more likely to prefer reforms that make it more progressive. Treatment effects are driven by the large fraction of respondents who underestimate the regressivity of the VAT. They are disproportionately right-leaning and more likely to attribute success to individual effort than luck; treatment effects are largest among individuals who hold these views of the world. Many respondents exhibit inconsistent preferences, violating the generalised axiom of revealed preferences; treatment effects are significantly stronger among consistent respondents. These findings expand the potential for information interventions to shift support for fiscal policy reforms protecting the most vulnerable.