Fairness Preferences, Inequality Acceptance and Default Effects

An influential subset of the literature on distributional preferences studies how preferences condition on information about workers’ characteristics, such as their relative productivity. In this study we confirm that there are default effects when such conditional fair-ness preferences are measured using the “inequality acceptance” method. Depending on the default, implemented inequality decreases by over 65% and cross-country differences are not observed. To organize the data, we develop a simple framework in which agents form a reference point based on a combination of their conditional distributional preferences and the default. We use this framework to illustrate that choice data from different defaults is needed to separately identify distributional preferences and default effects, and discuss best practices for measuring fairness preferences.