Immiserizing Redistribution: Voting to Get Poorer in the Meltzer-Richard Model

28 Pages Posted: 30 Apr 2013 Last revised: 1 May 2013

See all articles by Richard C. Barnett

Richard C. Barnett

Drexel University - Department of Economics & International Business

Joydeep Bhattacharya

Iowa State University - Department of Economics

Helle Bunzel

Iowa State University - Department of Economics

Date Written: April 8, 2013

Abstract

In the classic Meltzer and Richard (1981) model, the canonical model of income redistribution in democracies, voters, heterogeneous on the sole dimension of idiosyncratic productivity, evaluate an income-redistributive program that pays everyone a lump-sum income subsidy financed by a distorting income tax levied on all. The political-equilibrium policy under majority rule is the tax rate most preferred (in a utility sense) by the median voter. The larger the gap between the median and mean income, the larger is the scale of income redistribution favored by the median voter. But does the median voter actually end up with more income post redistribution? We establish, somewhat ironically, that the median voter (and many poorer voters) in the Meltzer-Richard model may support income redistribution that leaves them poorer in income terms. Indeed, the basis for their support may not be more income but more leisure. The analysis spotlights the fact that transfer income, unlike labor income, requires no direct sacrifice of leisure.

Keywords: redistribution, median voter, leisure

JEL Classification: H30, D72

Suggested Citation

Barnett, Richard C. and Bhattacharya, Joydeep and Bunzel, Helle, Immiserizing Redistribution: Voting to Get Poorer in the Meltzer-Richard Model (April 8, 2013). Available at SSRN: https://ssrn.com/abstract=2257936 or http://dx.doi.org/10.2139/ssrn.2257936

Richard C. Barnett

Drexel University - Department of Economics & International Business ( email )

3141 Chestnut St.
Philadelphia, PA 19104
United States

Joydeep Bhattacharya (Contact Author)

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States
515-294-5886 (Phone)
515-294-0221 (Fax)

Helle Bunzel

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States

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