Knowing One’s Lot in Life Versus Climbing the Social Ladder: The Formation of Redistributive Preferences in Urban China

This paper examines, how individual preferences for redistribution in general and redistribution to improve access to education, improve social protection for the poor, reduce income inequality and reduce unemployment depend on beliefs about what determines one’s lot in life and self-assessed prospects for climbing the social ladder in urban China. We find that beliefs about what determine one’s lot in life and subjective perceptions of future mobility are correlated with preferences for redistribution. We find that those who believe one’s lot in life is outside their control are generally more likely to favour redistribution. We show that this result is consistent with the existence of an altruism effect among the rich and entitlement effect among the poor. These findings are robust to the inclusion of control variables for the respondent’s personal characteristics and the location in which he or she lives.