ICES Seminar in Experimental Economics and Game Theory

Income Deciles vs. Prototypes: How Do People Estimate Economic Differences?

Friday, April 19, 2024 12:00 PM to 1:00 PM EDT
Vernon Smith Hall (formerly Metropolitan Building), 5183

ICES Seminar in Experimental Economics and Game Theory

 

The ICES Seminar in Experimental Economics and Game Theory of the Spring 2024 semester will feature:

Kris-Stella Trump

Johns Hopkins University

Income Deciles vs. Prototypes: How Do People Estimate Economic Differences?

 

 

Abstract

Accurately measuring perceptions of economic inequality is complicated. Objective measures of inequality are abstract and mathematically complex, so questions about them tend to follow suit. However, if questions are too complex, then respondents may react with “satisficing” responses, uninformative responses, or not respond at all. In this paper, we compare how respondents respond to different types of questions about incomes and income inequality, in the hopes of developing more intuitive survey questions about inequality. In a survey fielded to representative samples in Switzerland, Germany, and France, we ask respondents about inequality in two different ways. First, respondents are asked to estimate household incomes at specified percentiles of the income distribution (10th, and one of 90th or 99th). Later in the survey, they are asked to estimate the incomes that qualify a household as rich or poor, respectively. We anticipate that because the percentile questions are relatively abstract, respondents may satisfice by relying on their prototypes of the rich and the poor. We also anticipate that because the percentile questions are more mathematically involved, we may see systematic non-response patterns. The results show that in all three countries, the 90th percentile, the 99th percentile, and the rich are seen as significantly different in terms of household income. In other words, our expectation of satisficing is not borne out. We do however find significant rates of non-response and uninformative responses in the percentile questions (but not the questions about the rich/poor), in ways that appear to significantly affect the results.

 

For more information about the Seminar Series, please visit the Seminar Schedule homepage.

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