Equity Concerns Are Narrowly Framed

Abstract

Distributional decisions regularly involve multiple payoff components. In a series of experiments, we show that individuals sometimes exhibit narrow equity concerns: applying fairness preferences narrowly on a specific component of payoffs rather than on broader payoff consequences. This behavior results in different distributional decisions depending on which payoff component we frame individuals to consider. We document narrow equity concerns in an exceedingly simple setting—in which payoff components are tokens worth $0.01 and $0.02—and in context-rich applications including tax policy and worker compensation. (JEL C91, D63, D81, D91, H20, J33)