In Front of and Behind the Veil of Ignorance: An Analysis of Motivations for Redistribution Inside and Outside the Lab

Abstract

This paper uses a laboratory experiment and real world data to explore individuals' motivations for redistribution. The laboratory results show that as income uncertainty diminishes, participants become more extreme in their preferences for redistribution. The findings suggest that for most people, the motivation for redistribution is financial self-interest -- namely as insurance against future bad luck -- rather than furthering equity. However, a non-negligible fraction propose redistribution levels inconsistent with financial self-interest, and this fraction increases when participants can communicate prior to proposing. Data from the GSS show that these experimental findings help shed light on the ways preferences for redistribution evolve with age.

Keywords: Redisitribution, laboratory experiment, veil of ignorance, progressive tax, aging

JEL Classification: H2, D3