Tillmann Eymess, Heidelberg University
"Perceived relative income and preferences for public good provision"
We formulate a theory of how perceived relative income affects preferences for public goods under decreasing marginal benefits and inequality aversion. In a randomized survey experiment with an Indian sample, we inform respondents of official income ranks and test our theory on preferences for air quality, including actual contributions to environmental initiatives. Right-wing supporters withdraw contributions when perceived relative income increases. The effect coincides with diminished health concerns and lower intentions to utilize private defensive measures. Despite similar reductions in health concerns, center-left respondents do not reduce contributions. A second survey experiment provides robustness using a novel treatment that exogenously shifts relative income perceptions.
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