Found 15 article(s) for author 'Michael I. Norton'

(Mis)perceptions of Inequality

(Mis)perceptions of Inequality. Michael I. Norton, July 24, 2017, Paper, “Laypeople’s beliefs about the current distribution of outcomes such as income and wealth in their country influence their attitudes towards issues ranging from taxation to healthcare–but how accurate are these beliefs? We review the burgeoning literature on (mis)perceptions of inequality. First, we show that people on average misperceive current levels of inequality, typically underestimating the extent of inequality in their country. Second, we delineate potential causes of these misperceptions, including people’s overreliance on cues from their local environment, leading to their erroneous beliefs about both the overall distributions of wealth and income and their place in those distributions. Third, we document that these (mis)perceptions of inequality—but not actual levels of inequality—drive behavior and preferences for redistribution. More promisingly, we review research suggesting that correcting misperceptions influences preferences and policy outcomes.Link

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Social Recycling Transforms Unwanted Goods into Happiness

Social Recycling Transforms Unwanted Goods into Happiness. Michael I. Norton, December 8, 2016, Paper, “Consumers are often surrounded by resources that once offered meaning or happiness but that have lost this subjective value over time—even as they retain their objective utility. We explore the potential for social recycling—disposing of used goods by allowing other consumers to acquire them at no cost—to transform unused physical resources into increased consumer happiness. Six studies suggest that social recycling increases positive affect relative to trash, recycling, and donations of goods to nonprofit organizations. Both perceptions of helping the environment and helping other people drive this increase in positive affect. We conclude that social recycling offers a scalable means for reengineering the end of the consumption cycle to transform unused resources into happiness. We suggest that further research should continue to enrich a general theory of disposition, such that we are able to maximize the ecological, interpersonal, and community utility of partially depleted resources.Link

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Invisible Inequality Leads to Punishing the Poor and Rewarding the Rich

Invisible Inequality Leads to Punishing the Poor and Rewarding the Rich. Michael I. Norton, November 10, 2016, Paper, “How does lack of awareness of income inequality affect behaviour towards the rich and poor? To address this question, we assigned participants either at random or based on merit to one of five income levels (reflective of the U.S. income distribution), who then played a repeated public goods game with punishment, reward or both. When participants did not know the income distribution, they punished the poor and rewarded the rich.Link

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Tax Aversion in Labor Supply

Tax Aversion in Labor Supply. Michael I. Norton, April 2016, Paper. “In a real-effort laboratory experiment, labor supply decreases more with the introduction of a tax than with a financially equivalent drop in wages. This “tax aversion” is large in magnitude: when we decompose the productivity decrease that arises from taxation, we estimate that 40% is due to the lower net wage and the remaining 60% to tax aversion. This tax aversion affects labor supply more on the extensive margin (working less) than on the intensive margin (being less productive while working). The aversion is equally strong whether tax revenue goes to the U.S. government or back to the experimenter (a “laboratory tax”). We discuss the implications of our results for the relationship between labor supply and taxation.Link

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BUYING TIME: The Science of Happier Spending

BUYING TIME: The Science of Happier Spending. Michael I. Norton, Winter 2016, Paper. “MANY OF US WISH WE HAD MORE FREE TIME to do what we love — whether it be working out, reading or playing guitar. In theory, it is possible to use the money we earn to ‘buy’ more of this kind of time; but research suggests that even when we can afford to do so, we are not spending our time in more enjoyable ways on a regular basis.Link

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Time, Money, and Happiness

Time, Money, and Happiness. Michael I. Norton, November 4, 2015, Paper. “We highlight recent research examining how people should manage their most precious resources – time and money – to maximize their happiness. Contrary to people’s intuitions, happiness may be less contingent on the sheer amount of each resource available and more on how people both think about and choose to spend them. Overall, focusing on time leads to greater happiness than focusing on money. Moreover, people enjoy greater happiness from spending money on others rather than themselves and from acquiring experiences instead of possessions. Similarly, people enjoy greater happiness from spending time on or with others and from acquiring experiences – both extraordinary and ordinary.Link

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Paying Up for Fair Pay: Consumers Prefer Firms with Lower CEO-to-Worker Pay Ratios

Paying Up for Fair Pay: Consumers Prefer Firms with Lower CEO-to-Worker Pay Ratios. Rohit Deshpandé, Michael I. Norton, 2015, Paper. “Prior research examining consumer expectations of equity and price fairness has not addressed wage fairness, as measured by a firm’s pay ratio. Pending legislation will require American public companies to disclose the pay ratio of CEO wage to the average employee’s wage. Our six studies show that pay ratio disclosure affects purchase intention of consumers via perceptions of wage fairness. The disclosure of a retailer’s high pay ratio (e.g., 1000 to 1) reduces purchase intention relative…Link

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The Not-So-Common-Wealth of Australia: Evidence for a Cross-Cultural Desire for a More Equal Distribution of Wealth.

The Not-So-Common-Wealth of Australia: Evidence for a Cross-Cultural Desire for a More Equal Distribution of Wealth. Michael I. Norton, December 2014, Paper. “Recent evidence suggests that Americans underestimate wealth inequality in the United States and favor a more equal wealth distribution (Norton & Ariely). Does this pattern reflect ideological dynamics unique to the United States, or is the phenomenon evident in other developed economies-such as Australia? We assessed Australians’ perceived and ideal wealth distributions and compared them to the actual wealth distribution. Although the United States and Australia differ…” Link

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How Much (More) Should CEOs Make? A Universal Desire for More Equal Pay

How Much (More) Should CEOs Make? A Universal Desire for More Equal Pay, Michael I. Norton, November 2014, Paper, Do people from different countries and different backgrounds have similar preferences for how much more the rich should earn than the poor? Using survey data from 40 countries (N = 55,238), we compare respondents’ estimates of the wages of people in different occupations – chief executive officers, cabinet ministers, and unskilled workers – to their ideals for what those wages should be. We show that ideal pay gaps between skilled and unskilled workers are significantly smaller than estimated pay gaps, and that there is consensus across countries, socioeconomic status, and political beliefs for ideal pay ratios. Moreover, data from 16 countries reveals that people dramatically underestimate actual pay inequality. In the United States – where underestimation was particularly pronounced – the actual pay ratio of CEOs to unskilled workers (354:1) far exceeded the estimated ratio (30:1) which in turn far exceeded the ideal ratio (7:1). In sum, respondents underestimate actual pay gaps, and their ideal pay gaps are even further from reality than those underestimates. Link

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Individual Experience of Positive and Negative Growth is Asymmetric: Evidence from Subjective Well-being Data

Individual Experience of Positive and Negative Growth is Asymmetric: Evidence from Subjective Well-being Data. Michael I. Norton, October 2014, Paper. “Are individuals more sensitive to losses than gains in macroeconomic growth? Using subjective well-being measures across three large data sets, we observe an asymmetry in the way positive and negative economic growth are experienced, with losses having more than twice as much impact on individual happiness as compared to equivalent gains. We use Gallup World Poll data drawn from 151 countries, BRFSS data taken from a representative sample of 2.5 million UN respondents…” Link

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