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Group Loyalty and the Taste for Redistribution

Posted: 21 May 2001  

Erzo F. P. Luttmer

Dartmouth College; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Abstract

Interpersonal preferences-preferences that depend on the characteristics of others-are typically hard to infer from observable individual behavior. As an alternative approach, this paper uses survey data to investigate interpersonal preferences. I show that self-reported attitudes toward welfare spending are determined not only by financial self-interest but also by interpersonal preferences. These interpersonal preferences are characterized by a negative exposure effect-individuals decrease their support for welfare as the welfare recipiency rate in their community rises-and racial group loyalty-individuals increase their support for welfare spending as the share of local recipients from their own racial group rises. These findings help to explain why levels of welfare benefits are relatively low in racially heterogeneous states.

Suggested Citation

Luttmer, Erzo F. P., Group Loyalty and the Taste for Redistribution. Journal of Political Economy, June 2001. Available at SSRN: https://ssrn.com/abstract=268045

Erzo F.P. Luttmer (Contact Author)

Dartmouth College ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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