The streaking star effect: Why people want superior performance by individuals to continue more than identical performance by groups
Jesse Walker & Thomas Gilovich
Journal of Personality and Social Psychology, forthcoming
We present evidence in 9 studies (n = 2,625) for the Streaking Star Effect -- people’s greater desire to see runs of successful performance by individuals continue more than identical runs of success by groups. We find this bias in an obscure Italian sport (Study 1), a British trivia competition (Study 2), and a tennis competition in which the number of individual versus team competitors is held constant (Study 3). This effect appears to result from individual streaks of success inspiring more awe than group streaks -- and that people enjoying being awe-inspired. In Studies 4 and 5, we found that the experience of awe inspired by an individual streak drives the effect, a result that is itself driven by the greater dispositional attributions people make for the success of individuals as opposed to groups (Study 6). We demonstrate in Studies 7a and 7b that this effect is not an artifact of identifiability. Finally, Study 8 illustrates how the Streaking Star Effect impacts people’s beliefs about the appropriate market share for companies run by a successful individual versus a successful management team. We close by discussing implications of this effect for consumer behavior, and for how people react to economic inequality reflected in the success of individuals versus groups.
COVID-19 Changed Tastes for Safety-Net Programs
Alex Rees-Jones et al.
NBER Working Paper, September 2020
In June 2020, we surveyed 2,516 Americans regarding their preferences for both short- and long-term expansions to government-provided healthcare and unemployment insurance programs. We find that support for such programs is positively associated with (a) COVID-19 deaths and infections in the respondent’s county, (b) the pandemic-induced change in the unemployment rate in the respondent’s county, and (c) survey elicitations of the respondent’s perceptions of COVID-19’s consequences. These associations persist when controlling for pre-COVID-19 political ideology and demographics. These results suggest that real or perceived exposure to COVID-19’s consequences has influenced support for expansions to the U.S. safety-net system.
Household Inequality, Entrepreneurial Dynamism, and Corporate Financing
Fabio Braggion, Mintra Dwarkasing & Steven Ongena
Review of Financial Studies, forthcoming
Economic theories posit conflicting hypotheses on how wealth inequality affects entrepreneurial dynamism. We investigate the impact of wealth inequality on business dynamics by constructing local measures of household wealth inequality based on financial rents, home equity, and 1880 farmland. We then identify the effect of wealth inequality on entrepreneurship by instrumenting it with land distribution under the 1862 Homestead Act. Wealth inequality decreases firm entry and exit, and the proportion of high-tech businesses across metropolitan statistical areas. Wealth inequality also lowers the supply of public goods, such as education. Growth in income per capita consequently lags.
Inequality of Opportunity for Income in Denmark and the United States: A Comparison Based on Administrative Data
Pablo Mitnik, Anne-Line Helsø & Victoria Bryant
NBER Working Paper, September 2020
We carry out a comparative analysis of inequality of opportunity (IOp) for long-run income in Denmark and the United States. We adopt a luck-egalitarian understanding of IOp, use high-quality administrative data, and rely on highly improved methods. These include novel identification assumptions that allow us to produce set estimates of IOp in the United States relative to Denmark rather than just lower-bound estimates of IOp in the two countries. There are five main results. First, with types based only on gender and parental income rank as the circumstances beyond people’s control, measured IOp for income is high in the United States and far from negligible in Denmark: before taxes and transfers, the lower-bound Gini coefficients for individual earnings and family income opportunities are in the 0.21-024 range in the United States and in the 0.08–0.12 range in Denmark. Second, the tax system and the welfare state reduce measured IOp in both countries, but they do so by more than twice as much in Denmark. Third, our analyses in terms of disposable family income per adult — which factor in taxes and transfers and purge the effect of the association between parental income and the probability of marriage — entail that there is more IOp for income in the United States than overall income inequality in Denmark. Fourth, IOp for income is substantially higher in the United States than in Denmark. With opportunities defined in terms of disposable family income per adult, IOp is at the very least 68 percent higher in the United States, and this result is very robust to the inequality index employed in the analysis. Fifth, our lower-bound estimates of the unfair inequality as a share of overall inequality are much larger in both countries than typically reported for advanced economies. When we account for race and ethnicity as circumstances beyond people’s control (in addition to gender and parental income), our lower-bound estimate of that share for the U.S. reaches almost 58 percent. We conclude that the distribution of economic opportunities — and not just of economic outcomes — is substantially less unequal in Denmark than in the U.S., and that a very large share of U.S. income inequality may be tracked back to circumstances beyond people’s control.
Why Is So Much Redistribution In-Kind and Not in Cash? Evidence from a Survey Experiment
Zachary Liscow & Abigail Pershing
Yale Working Paper, August 2020
Basic economic theory prescribes that redistribution typically take the form of cash rather than in-kind goods and services, since cash lets the recipient choose how to use the resources, thereby maximizing benefits to the recipient. Notwithstanding this benefit, among the trillions of dollars of annual transfers in the United States, redistribution is mostly — and increasingly — in-kind. We help explain why with novel survey experiments to better-understand Americans’ preferences regarding the structure of government redistribution. Our survey experiment offers a large, demographically representative sample of respondents a hypothetical choice between a cash transfer and a transfer that can only be spent on a bundle of “necessities.” We make three main points. First, survey respondents overwhelmingly preferred in-kind over cash transfers to the poor. The most important reason for this choice is paternalism: the belief that the poor will not spend cash on the right things. The preference for in-kind was common to a majority of virtually all segments of the general population, though not to a sample of intellectual elites. Second, stated preferences suggest that respondents are willing to redistribute considerably more in-kind than in cash. We also surveyed the poor, who preferred receiving cash, but not as strongly as the general population preferred redistributing in-kind. The modesty of this preference among the poor in part comes from a sizable minority that preferred in-kind redistribution, which many anticipated functioning as a self-control mechanism. Third, a randomized treatment explaining the value of choice significantly increased the preference for cash over in-kind, but it did not change the overall preference for in-kind.
Judgments of Economic Fairness Are Based More on Perceived Economic Mobility Than Perceived Inequality
Nicholas Heiserman, Brent Simpson & Robb Willer
Socius: Sociological Research for a Dynamic World, September 2020
Are judgments of the fairness of the American economy based on perceptions of economic inequality, mobility, or both? In two experiments, the authors varied information on levels of U.S. inequality and mobility, measuring effects on individuals’ judgments of economic fairness and meritocracy. Although both treatments influenced perceptions of economic fairness and meritocracy, the mobility effect was generally larger. The two treatments did not interact, countering a common claim that high social mobility legitimizes high inequality. Effects on preferences for government action to reduce inequality and increase mobility were weak or nonexistent. Additional conditions that measured, rather than manipulated, inequality and mobility perceptions showed that respondents generally perceived inequality to be very high but were more optimistic about the level of mobility. Our studies suggest that Americans’ optimism about economic mobility does more to mitigate concerns about economic fairness than does underestimation of economic inequality.
Psychological pathways linking income inequality in adolescence to well-being in adulthood
Lora Park et al.
Self and Identity, forthcoming
Does exposure to income inequality in adolescence relate to well-being in adulthood? In Studies 1 and 2 (N = 888), individuals who grew up in U.S. counties with higher income inequality expected greater benefits of financial success as adults, were more likely to base their self-worth on money, and felt less happy and satisfied with their lives. Upward social comparisons may play a key role in this process. Participants who made upward (vs. downward) financial comparisons perceived greater economic disadvantage, which predicted greater expected benefits of financial success, basing self-worth on money, and lower well-being (Study 3, N=336). Together, these studies suggest that past exposure to income inequality may be linked to lower well-being in adulthood due to financial contingency of self-worth.
Driven by Inequalities: Exploring the Resurgence of Domestic Work in U.S. Cities
Sociological Forum, September 2020, Pages 608-627
Domestic work, once the most common occupation for women around the globe, was thought to be well on its way to extinction at the end of the twentieth century. However, in the 1980s and 1990s, evidence began to appear that domestic work was in many places again becoming a growth occupation. My goal in this article is to examine the factors related to the recent expansion of domestic work in countries in the Global North, using the United States as a case study. I draw on U.S. Census data to document the resurgence of domestic work both nationally and in many large cities across the country, and then use multivariate analysis to compare rates of domestic work across these cities. The results indicate that rates of domestic work are highly related to variables measuring structural inequalities (racialization of the labor force, immigration, and economic polarization), while showing little relationship with variables measuring unmet care needs (care dependency ratios, female/maternal labor force participation, and availability of institutional care options). These findings underline the urgency of providing protections to domestic workers and point to the need for scholarship that better theorizes the relationships among unpaid care and different forms of paid care.
Economic Inequality Shapes the Relationship Between Globalization and Prejudice
Nava Caluori, Jazmin Brown-Iannuzzi & William Cipolli
Social Psychological and Personality Science, forthcoming
As globalization increases worldwide, it redefines our conceptions of other cultures, the media we consume, and our day-to-day interactions. Despite this increased interconnectivity, we lack a fundamental understanding of how globalization is related to prejudicial attitudes between social groups. We hypothesized that economic inequality may shape the relationship between globalization and intergroup prejudice. We tested this prediction with data from over 66,000 respondents across 44 countries. We found that globalization — and particularly its social aspects such as tourism and migration — is related to increased prejudice in countries with high economic inequality and is related to decreased prejudice in countries with low economic inequality. These findings offer new insight into how and why globalization may shape intergroup relations around the world.
People adapt more slowly to social income changes than to temporal income changes
Xilin Li, Christopher Hsee & Li Wang
Journal of Experimental Psychology: Applied, forthcoming
People hedonically adapt to most changes, but they adapt more slowly to some changes than to others. This research examines hedonic adaptation to income changes, and asks whether people adapt more slowly to social or temporal income changes. Four experiments, manipulating the actual pay rate of online workers, find that people adapt more slowly to social income changes (e.g., a decrease in others’ income but not in one’s own income) than to temporal income changes (e.g., an increase in everyone’s income). This pattern holds for both negative changes (Experiment 1) and positive changes (Experiments 2, 3, and 4) and can be explained by a differential-consideration account (Experiment 3). These results suggest that in the short run, both temporal and social changes influence one’s hedonic experience, but in the long run, what influences one’s hedonic experiences is how much one earns relative to how much others earn, and not how much one earns now relative to how much one earned in the past. This research enriches the existing literature on hedonic adaptation, and on social versus temporal changes, and yields practical implications for the impact of income changes on subjective well-being over time.
Trends and Disparities in Subjective Upward Mobility since 1940
Thor Berger & Per Engzell
Socius: Sociological Research for a Dynamic World, September 2020
Concerns that prospects for upward mobility are fading are common in popular and scientific discourse. The fact that fewer Americans today surpass their parents’ economic status than in the past has been invoked to explain trends ranging from the recent spike in drug and alcohol poisonings to the growing appeal of right-wing populism. Using General Social Survey data, the authors ask whether people actually feel that their standard of living is falling short of that of previous generations. In contrast to data on income, education, or occupation, a majority still perceive that they have attained a higher standard of living than their parents. At the same time, mobility experiences are becoming increasingly polarized: subjective upward mobility is rising among highly educated, minority, and urban populations and declining among less educated and rural populations.
Financial Returns to Household Inventory Management
Scott Baker, Stephanie Johnson & Lorenz Kueng
NBER Working Paper, August 2020
Households tend to hold substantial amounts of non-financial assets in the form of inventory. Households can obtain significant financial returns from strategic shopping and optimally managing these inventories of consumer goods. In addition, they choose to maintain liquid savings – household working capital – not just for precautionary motives but also to support this inventory management. We demonstrate that households earn high returns from inventory management at low levels of inventory, though returns decline rapidly as inventory levels increase. We provide evidence using scanner and survey data that supports this conclusion. High returns from inventory management that are declining in wealth offer a new rationale for poorer households not to participate in risky financial markets, while wealthier households invest in both financial assets and working capital.