Abstract:
The United States and the Scandinavian countries are two extremes among the OECD countries with respect to income distribution and redistributive policy. In this paper we study whether these
differences correspond to differences in social preferences. In particular, we study whether there are systematic differences between these countries in what is seen as fair income inequalities and in the importance attached to fairness relative to efficiency. We conducted a real effort dictator game on a large representative sample from the US and one Scandinavian country, Norway. By manipulating the source of inequality and the cost of redistribution we were able to test whether Americans are more meritocratic and more efficiency-seeking than Norwegians when they make distributive choices as spectators. We find that Americans in general are much more willing to accept inequality than Norwegians even when faced with identical distributive situations. This difference is, however, not a result of Americans being more meritocratic or efficiency-seeking than Norwegians. The difference in inequality acceptance is large even when the inequality is a result of luck and there is no cost of redistribution. In both countries we find that the source of inequality is more important for inequality acceptance than the cost of redistribution.
