The widespread use of markets leads to unprecedented material well-being in many societies. We study whether market interaction, as a side effect, erodes moral values. In an influential paper, Falk and Szech (2013) provide experimental data that seem to suggest that “market interaction erodes moral values.” Although we replicate their main treatment effect, we show that additional treatments are necessary to corroborate their conclusion. These treatments reveal that playing repeatedly, and not market interaction, causes the erosion of moral values. Our paper thus shows that neither Falk and Szech's data nor our data support the claim that markets erode morals.

We study the link between social preferences and a behaviorally validated measure of support for redistribution. We uncover three fundamentally distinct social preference types: predominantly selfish, inequality averse and altruistic individuals. Inequality averse and altruistic individuals display a much stronger support for redistribution, particularly if they are more affluent. Beliefs about the role of effort and luck for success play no role for selfish individuals but are highly relevant for other-regarding individuals. Finally, while inequality averse individuals display strong support for policies aimed at reducing the incomes of the rich, altruistic individuals are considerably less supportive of these policies.