Economic Inequality and Willingness to Pay for Collective Goods: Theory and Experimental Evidence

Building on findings in diverse literatures in political science, economics and psychology,we surmise that an important effect of the steep rise in inequality in the UnitedStates may be to undermine popular support for public investment in costly collectivegoods. We argue that economic inequality may influence perceptions of the: fairness ofthe political economy system in the broad sense; fairness of the distributive features of apolicy on either the tax or spend side; and likelihood of successful delivery of promisedpolicy goals. Via any of these mechanisms, citizens who learn or attend to the fact thatthey are on the losing side of rising inequality might be expected to become less willingto pay material costs to pay for collective goods. We evaluate the impact of inequalityon collective goods support, finding support for our theory in a series of experimentalstudies