When Merit Breeds Luck (or Not): An Experimental Study on Distributive Justice

We experimentally investigate subjects’ preferences for redistribution depending on i) their personal stake in the outcome (either absent or not), ii) the effect of luck in strengthening or weakening the income inequality as derived from merit, and iii) whether individuals are informed about their relative wealth position in the society or not. We find that self-interest is the main driver of subjects’ redistributive choices when they have direct monetary interests in the outcome. Leaving subjects under the veil of ignorance about their relative gross income position reduces selfish behavior, also controlling for beliefs and risk attitude. Inequality aversion and fairness mostly affect redistributive choices of impartial spectators when recipients of redistribution are not informed about their initial endowments, suggesting that the luck vs. merit effect is not the only driver of redistribution on behalf of others.