The other day, Greg Mankiw published an interesting post on his blog:
Mankiw quotes Daniel Kahneman’s book Thinking, Fast and Slow and discusses the effect of differences in ambitions (i.e. heterogeneous preferences) on individual’s labor market outcome. Furthermore, Mankiw points to a recent paper by Lockwood and Weinzierl about preference heterogeneity. Therein, the authors conclude:
Attributing a portion of the observed variation in incomes to preferences rather than ability reduces the optimal extent of redistribution.
Swiss Economist 