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Abstract

Guided by a theoretical framework, we study how perceived relative income affects preferences for public goods. In a randomized survey experiment, we inform respondents from India of their official income rank and elicit preferences for air quality, including actual contributions to environmental initiatives. Right-wing supporters withdraw contributions when perceived relative income increases. The effect coincides with diminished health concerns and lower intentions to utilize private protection measures against air pollution. In contrast, center-left supporters do not reduce contributions. A second survey experiment demonstrates the causality of the relationship using a novel treatment that exogenously shifts relative income perceptions.