Social Preferences Over Taste-Based Inequality

Many economic allocation decisions involve subjective judgment. This judgment may be perceived as fair when needs are considered but may seem unjust in cases of personal-taste discrimination. In an experimental impartial-spectator design, we explore perceptions of taste-based inequality and compare them to attitudes toward inequalities grounded in objective procedures, namely, merit and luck. We find that while taste-based inequality is perceived distinctly, it is treated as unfair, similar to luck and unlike merit. Additionally, our work suggests that the perception of merit as more fair than luck is primarily driven by individuals with above-average income.