The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment / Ricardo Perez-Truglia.

Format:

Book

Author/Creator:

Perez-Truglia, Ricardo.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25622.

NBER working paper series no. w25622

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Effects of Income Transparency on Well-Being

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

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. We test this hypothesis using survey data from 1985-2013. Using multiple identification strategies, we show that the higher transparency increased the gap in happiness between richer and poorer individuals by 29%, and it increased the life satisfaction gap by 21%. We provide suggestive evidence that some, although probably not all, of this effect relates to changes in self-perceptions of relative income. We provide back-of-the-envelope estimates of the importance of income comparisons, and discuss implications for the ongoing debate on transparency policies.

Notes:

Print version record

February 2019.