PREFERENCES FOR REDISTRIBUTION AND PERCEPTION OF FAIRNESS: AN EXPERIMENTAL STUDY

PREFERENCES FOR REDISTRIBUTION AND PERCEPTION OF FAIRNESS AN EXPERIMENTAL STUDY

We conduct a laboratory experiment to study how demand for redistribution of income depends on self-interest, insurance motives, and social concerns relating to inequality and efficiency. Our choice environments feature large groups of subjects and real-world framing, and differ with respect to the...

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Bibliographic Details
Published in:Journal of the European Economic Association Vol. 12; no. 4; pp. 1059 - 1086
Main Authors: Durante, Ruben, Putterman, Louis, van der Weele, Joël
Format: Journal Article
Language:English
Published: Oxford Oxford University Press 01-08-2014
Wiley
Subjects:
C91
D31
Decision making models
Demand
Economic theory
Economics and Finance
Experiments
H24
Humanities and Social Sciences
Income distribution
Income redistribution
Income taxes
Inequality
Macroeconomics
P16
Political economy
Preferences
Studies
Taxation
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Summary:We conduct a laboratory experiment to study how demand for redistribution of income depends on self-interest, insurance motives, and social concerns relating to inequality and efficiency. Our choice environments feature large groups of subjects and real-world framing, and differ with respect to the source of inequality (earned or arbitrary), the cost of taxation to the decision maker, the dead-weight loss of taxation, uncertainty about own pretax income, and whether the decision maker is affected by redistribution. We estimate utility weights for the different sources of demand for redistribution, with the potential to inform modeling in macroeconomics and political economy
Bibliography:Acknowledgments: We are grateful to Roland Benabou, Samuel Bowles, Jeremy Clark, Pedro Dal Bo, Stefano DellaVigna, Kfir Eliaz, Eirini Tatsi, Jean‐Robert Tyran, and three anonymous referees for very helpful comments and suggestions. We would also like to thank seminar participants at Brown, Princeton, UMass Amherst, Padua, Trento, and Copenhagen, as well as participants at the ESA 2007 Conference, the 2007 ECINEQ meeting, and the 2008 La Pietra‐Mondragone Workshop for helpful discussion. We thank Adam Rachlis for his help in initiating the set of experiments that led to this paper, and Gregory Wyckoff for rapid and efficient programming of the software used. Funding for this study was provided by the Alex C. Walker Foundation, the Steven Rattner and P. Maureen White Foundation and the Department of Economics at Brown University.
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The editor in charge of this paper was Stefano DellaVigna
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ISSN:1542-4766
1542-4774
DOI:10.1111/jeea.12082