Preferences for Redistribution and the Perception of a Fair Society
Posted: 1 Aug 2011 Last revised: 29 Aug 2011
Date Written: 2011
This paper examines the determinants of individuals’ preferences for government redistribution, focusing on people’s beliefs about the role of effort and luck in individual success. The main contribution of the paper is to discriminate empirically between two theoretical channels by which these beliefs are supposed to affect individuals’ attitudes towards redistribution. On one side, the beliefs about the role of effort and luck could be seen as a proxy for the expected incentive cost of redistribution. On the other side, some authors suggest that these beliefs affect the preferences for redistribution because individuals are concerned about the fairness of income distribution. Using ISSP micro survey data for 25 OECD countries, we run ordered logit regressions, attitudes towards government redistribution being our variable of interest. Controlling for standard determinants (income, occupation, gender, age...), we show that reciprocity concerns might partly explain the variance in preferences for redistribution, suggesting that fairness issues are far from being consensual in modern societies. But more importantly, our results show that the “disincentive effect” channel plays a significant role, even for people for which reciprocity concerns are expected to be high. Finally, we show that both fairness and disincentives concerns have a higher explanation power for richer individuals or individuals with a wealthy family background: this suggests that the impact of those concerns on redistributive preferences is not entirely independent from self-interest concerns.
Keywords: fairness, incentives, inequality, preferences for redistribution
JEL Classification: D63, H50
Suggested Citation: Suggested Citation