Surveys and Experiments to Understand How People Think about the Economy Stefanie Stantcheva October 2020 1 10 Method: Large-scale Social Economics Surveys and Experiments Surveys are a key tool: Some things can not be seen in other data, no matter how good it is: Perceptions, attitudes, knowledge, views. Unlike old-style surveys (that measure variables now better captured in admin data). New generation surveys: Customizable, controllable, interactive. Social Economics Lab http://socialeconomicslab.org Website on “Understanding Economics” (what people know about economics): understandingeconomics.org 2 10 PROJECTS (1) “Intergenerational Mobility and Preferences for Redistribution" by Alberto Alesina, Stefanie Stantcheva, and Edoardo Teso (2) “Immigration and Redistribution" by Alberto Alesina, Armando Miano, and Stefanie Stantcheva (3) “How Elastic Are Preferences for Redistribution: Evidence from Randomized Survey Experiments” by Ilyana Kuziemko, Michael I. Norton, Emmanuel Saez, and Stefanie Stantcheva (4) “Understanding Tax Policy: How Do People Reason?" by Stefanie Stantcheva 3 10 Intergenerational Mobility and Support for Redistribution Alberto Alesina, Stefanie Stantcheva, and Edoardo Teso https://scholar.harvard.edu/stantcheva/publications/ intergenerational-mobility-and-support-redistribution 4 10 Intergenerational Mobility and Preferences for Redistribution Alberto Alesina, Stefanie Stantcheva, and Edoardo Teso 1 1 (Stereo)typically Documented Views Continental Europeans: Americans: Econ system is basically unfair Econ system mostly “fair," American dream alive Wealth due to family history, connections, sticky social Wealth is reward for ability and classes effort Poverty due to bad luck, Poverty due to inability to take society’s inability to help the advantage of opportunity needy Effort pays off Effort may payoff 70% of Americans versus 35% of Europeans believe you can climb social ladder if you work hard (WVS) Yet, intergenerational mobility not systematically higher in the US (Chetty et al. 2014) 2 1 This Paper: Research Questions Do people have realistic views about intergenerational mobility? What are their views on fairness, such as the role of effort vs. luck? Link between perceived intergenerational mobility and preferred redistribution policies? I Equality of opportunities policies (education, bequest taxes) I Equality of outcome policies (social insurance, progressive income taxation)? Correlation and Causality (experimental). Heterogeneity by socio-economic background, political views, own mobility experience? 3 1 Method: Surveys and Randomized Experiments Online surveys on representative samples in the US, UK, France, Italy, and Sweden. Stats Research agenda ahead. Can collect more data to reduce noise, further treatments to test channels. Suggestions very welcome! Survey structure: Background/ Fairness / Randomized: Info on Mobility / Perceptions of Mobility / Policies / Randomized: Views on government Sample collected (mainly) September/October 2016 N 2, 000 for IT, UK, FR, N 4000 for U.S., N 1, 500 for SE. Sample≈ ≈ ≈ 4 1 Main Findings Americans are more optimistic than Europeans, but: I Americans too optimistic, especially about “American dream.” I Europeans too pessimistic, especially about staying stuck in poverty. People believe effort matters, but not for making it to the very top. Pessimism on mobility support for redistribution (especially ↔ “equality of opportunity policies.”) Experiment: more pessimistic increases support for → redistribution... but only among left-wing respondents. Strong polarization between left and right wing on government, redistribution: same information, very different effects. 5 1 Eliciting respondent’s beliefs on upward mobility 13 1 Probability of Staying in Bottom Quintile (Actual vs. Perceived) 38 UK 36 Pessimistic FR 34 IT 32 SE US 30 28 Average Perceived Probability Average Optimistic 26 24 24 26 28 30 32 34 36 38 Real Probability 19 1 Probability of Moving to Top Quintile (Actual vs. Perceived) 12 US 11 IT 10 Optimistic UK SE 9 FR 8 Average Perceived Probability Average 7 Pessimistic 6 6 7 8 9 10 11 12 Real Probability 20 1 Which Groups are More Pessimistic? Male Children Young African-American Immigrant Moved up College Rich Effort reason rich Lack of effort reason poor Econ system fair Unequal opp. problem Left-Wing 25 30 35 40 Pessimism: % staying in bottom quintile Yes No Men, people without children, high income, college-educated, young, non African-American, those who do not believe in effort, think unequal opp. are problem. 23 1 Which Groups are More Pessimistic? Male Children Young African-American Immigrant Moved up College Rich Effort reason rich Lack of effort reason poor Econ system fair Unequal opp. problem Left-Wing 25 30 35 40 Pessimism: % staying in bottom quintile Yes No Strongest predictor are political views (left/right wing). 23 1 Does Effort Change the Perceived Mobility? 10 5 0 -5 -10 Conditional Minus UnconditionalProbability -15 Q1 to Q1 Q1 to Q2 Q1 to Q3 Q1 to Q4 Q1 to Q5 US UK France Italy Sweden 25 1 Actual probability of moving from bottom to top quintile Average Actual Probability > 14.74 12.63 - 14.74 10.52 - 12.63 9.14 - 10.52 8.06 - 9.14 6.44 - 8.06 <6.44 27 1 Perceived probability of moving from bottom to top Average Perceived Probability > 14.74 12.63 - 14.74 10.52 - 12.63 9.14 - 10.52 8.06 - 9.14 6.44 - 8.06 <6.44 No data 28 1 Actual and perceived probability of moving from bottom to top quintile Average Perceived Probability Average Actual Probability > 14.74 12.63 - 14.74 10.52 - 12.63 9.14 - 10.52 8.06 - 9.14 6.44 - 8.06 <6.44 No data 29 1 Ratio of actual local and perceived probability of moving from bottom to top Ratio of Perceived to Actual State-Level Probability >2.18 1.57 - 2.18 1.28 - 1.57 0.98 - 1.28 <0.98 No data What are local perceptions correlated with, controlling for individual-level characteristics? National 30 1 Ratio of actual local and perceived probability of moving from bottom to top Ratio of Perceived to Actual State-Level Probability >2.18 1.57 - 2.18 1.28 - 1.57 0.98 - 1.28 <0.98 No data Include: manufacturing share, college grads, income, etc... 30 1 Ratio of actual local and perceived probability of moving from bottom to top Ratio of Perceived to Actual State-Level Probability >2.18 1.57 - 2.18 1.28 - 1.57 0.98 - 1.28 <0.98 No data Strongest predictors of optimism: 1) high racial segregation 2) low income segregation (controlling for both at same time). 30 1 Pessimism, Optimism, and Top Tax Rate 42 42 0.0567*** -.1608*** (0.0118) (0.0296) 40 40 38 38 Tax Rate Top 1% Top Rate Tax 1% Top Rate Tax 36 36 34 34 32 32 0 20 40 60 80 100 0 10 20 30 40 Pessimism: % staying in bottom quintile Optimism: % moving to top quintile 32 1 Taxes Spending Pessimism, Optimism, and Bottom Tax Rate 14 14 -.0352*** (0.0067) 12 12 10 10 Tax Rate Bottom50% Tax Rate50% Bottom Tax 0.1397*** (0.0167) 8 8 0 20 40 60 80 100 0 10 20 30 40 Pessimism: % staying in bottom quintile Optimism: % moving to top quintile 33 1 Strong Correlation with Equality of Opportunity Policies: Education and Health 40 40 -.094*** (0.0165) 38 38 Budget Opportunities Budget Opportunities 36 36 0.0299*** (0.0067) 34 34 0 20 40 60 80 100 0 10 20 30 40 Pessimism: % staying in bottom quintile Optimism: % moving to top quintile 34 1 Weaker Correlation with Safety Net Policies 15 15 0.0044 (0.0114) 14 14 Budget Safety Net Budget Safety Net 13 13 0.0131*** (0.0046) 12 12 0 20 40 60 80 100 0 10 20 30 40 Pessimism: % staying in bottom quintile Optimism: % moving to top quintile 35 1 Fairness Perceptions by Country Economic System Fair American Dream Alive Effort Reason Poor Effort Reason Rich .1 .2 .3 .4 .5 .6 Share Answering Yes US UK France Italy Sweden Widespread discontent. U.S. and SE more optimistic (market vs. welfare state?). IT and FR terribly pessimistic. 40 1 Fairness Perceptions by Country Economic System Fair American Dream Alive Effort Reason Poor Effort Reason Rich .1 .2 .3 .4 .5 .6 Share Answering Yes US UK France Italy Sweden U.S. respondents believe more in effort, large variation across countries. 40 1 Fairness Perceptions: Left versus Right Economic System Fair American Dream Alive Effort Reason Poor Effort Reason Rich 0 .2 .4 .6 .8 1 Share Answering Yes Left-Wing Right-Wing Left-wing more pessimistic than right-wing. Right-wing respondents believe much more in role of individual effort. 41 1 Bad Views of Government by Left and Right Never Trust Government Government Has No Tools Prefer Low Govt. Intervention Lowering Taxes Better Unequal Opp. No Problem Negative View of Government 0 .2 .4 .6 .8 1 Share Answering Yes Left-Wing Right-Wing Important to take into account multidimensional perceptions. 43 1 Bad Views of Government by Left and Right Never Trust Government Government Has No Tools Prefer Low Govt. Intervention Lowering Taxes Better Unequal Opp. No Problem Negative View of Government 0 .2 .4 .6 .8 1 Share Answering Yes Left-Wing Right-Wing Left and Right distrust government, agree unequal opportunities are a problem, 43 1 but disagree on the solution. Bad Views of Government by Left and Right Never Trust Government Government Has No Tools Prefer Low Govt. Intervention Lowering Taxes Better Unequal Opp. No Problem Negative View of Government 0 .2 .4 .6 .8 1 Share Answering Yes Left-Wing Right-Wing A composite measure of “against government” shows big contrast. 43 1 Immigration and Redistribution Alberto Alesina, Armando Miano, and Stefanie Stantcheva https://scholar.harvard.edu/stantcheva/publications/ immigration-and-support-redistribution 5 10 Immigration and Redistribution Alberto Alesina, Armando Miano, and Stefanie Stantcheva Well, I live in Atlanta, but I guess you are asking where I am from originally? 1 / 47 2 / 47 We Study Two Broad Questions How do people (mis)perceive immigration? Are perceptions of immigration, about the number, origin, religion, unemployment, education, poverty, correct amongst natives of the host countries? What are natives’ views on immigration policies? Heterogeneity by political affiliation, work in high immigrant sector, income, education level..