The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment
By Ricardo Perez-Truglia. The American Economic Review, 2019
173 citations recorded by the source corpus.
In 2001, Norwegian tax records became easily accessible online, allowing everyone in the country to observe the incomes of everyone else. According to the income comparisons model, this change in transparency can widen the gap in well-being between richer and poorer individuals. Using survey data from 1985–2013 and multiple identification strategies, we show that the higher transparency increased the gap in happiness between richer and poorer individuals by 29 percent, and it increased the life satisfaction gap by 21 percent. We provide back-of-the-envelope estimates of the importance of income comparisons, and discuss implications for the ongoing debate on transparency policies. (JEL D31, H24, I31, K34)
Subfields: Accounting, Social Psychology, Sociology and Political Science
View Paper: https://www.semanticscholar.org/paper/d74b5e8c057acdbee289a1339e46f2d4ae9561dc
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Citations in the corpus
- Poverty, depression, and anxiety: Causal evidence and mechanisms (2020, methodology): “Using survey data from 1985 to 2013, a study showed that the gap in happiness and life-satisfaction between the rich and poor within Norway increased sharply once relative income became easily visible (67).”
- Do Firms Respond to Gender Pay Gap Transparency? (2019, unknown): “4Perez-Truglia (2016) shows how online access of the general public to tax income information in Norway increases relative well-being and life satisfaction for the rich.”