The meritocratic illusion: inequality and the cognitive basis of redistribution

Abstract Can an inequality in rewards result in an erosion of broad-based support for meritocratic norms? We examine whether unequal rewards can affect social preferences for redistribution by driving a cognitive gap in the meritocratic beliefs of those who are successful and those who are not. Two separate experiments (conducted in the USA and the UK) show that the elite develop and maintain ‘meritocratic bias’ in the redistributive taxes they propose. This bias results in lower taxes on the rich and fewer transfers to the poor, including those who failed despite high effort. These social preferences at least partially reflect a self- serving meritocratic illusion that their own high income was deserved and reflected their ability. An incentivized Wason Card task confirms that individuals prefer to maintain their illusion of being meritocratic, by not expending cognitive effort to process any information that may undermine their self-image of being deserving.