Preferences for Redistribution and Social Structure

KU Leuven Center for Economic Studies Discussion Paper Series DPS14.01

57 Pages Posted: 10 Jan 2014

See all articles by Erik Schokkaert

Erik Schokkaert

Catholic University of Leuven (KUL)

Tom Truyts

KU Leuven - Faculty of Business and Economics (FEB); Facultés Universitaires Saint Louis à Bruxelles; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Date Written: January 2014

Abstract

We model inter-individual differences in preferences for redistribution as a function of (a) self-interest; (b) stable ideological traits; (c) subjective perceptions of the relative importance of the main determinants of income differences (luck, effort, talent). Individuals base the latter on information obtained from their reference group. We analyse the consequences for redistributive preferences of homophilous reference group formation based on talent. We argue that our theoretical results make it possible to understand and integrate some of the main insights from the empirical literature. We illustrate with GSS data from 1987 how our model may help in structuring empirical work.

JEL Classification: D30, D63, D70

Suggested Citation

Schokkaert, Erik and Truyts, Tom, Preferences for Redistribution and Social Structure (January 2014). KU Leuven Center for Economic Studies Discussion Paper Series DPS14.01, Available at SSRN: https://ssrn.com/abstract=2376696 or http://dx.doi.org/10.2139/ssrn.2376696

Erik Schokkaert (Contact Author)

Catholic University of Leuven (KUL) ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Tom Truyts

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Facultés Universitaires Saint Louis à Bruxelles ( email )

Boulevard du Jardin Botanique 43
Bruxelles, 1000
Belgium

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

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