Reciprocity and the Welfare State
HANDBOOK ON THE ECONOMICS OF GIVING, RECIPROCITY AND ALTRUISM, Jean Mercier-Ythier, Serge Kolm and Louis-Andre, eds., Elsevier, Forthcoming
Posted: 19 Jul 2004
We explore the contribution of reciprocity and other non selfish motives to the political viability of the modern welfare state. In the advanced economies, a substantial fraction of total income is regularly transferred from the better off to the less well off, with the approval of the electorate. Economists have for the most part misunderstood this process due to their endorsement of an empirically implausible theory of selfish human motivation. Drawing on anthropological, experimental, public opinion survey and other data we develop an alternative behavioral explanation for economic reasoning about sharing and insurance. In this alternative view, reciprocity motives are necessary for understanding support for and opposition to the welfare state. Modern citizens willingly share with those who uphold societal norms about what constitutes morally worthy behavior, while frequently seeking to punish those who transgress those norms, even when these actions are individually costly and yield no individual material benefit.
Keywords: Fairness, Reciprocity, Distributive Justice, Equity, Redistribution, Welfare States
JEL Classification: D63, H50
Suggested Citation: Suggested Citation