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Preferences for Redistribution and Pensions: What Can We Learn from Experiments?

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Author Info

  • Tausch, Franziska

    ()
    (Maastricht University)

  • Potters, Jan

    ()
    (Tilburg University)

  • Riedl, Arno

    ()
    (Maastricht University)

Abstract

Redistribution is an inevitable feature of collective pension schemes and economic experiments have revealed that most people have a preference for redistribution that is not merely inspired by self-interest. Interestingly, little is known on how these preferences interact with preferences for different pension schemes. In this paper we review the experimental evidence on preferences for redistribution and suggest some links to redistribution through pensions. For that purpose we distinguish between three types of situations. The first deals with distributional preferences behind a veil of ignorance. In the second type of situation, individuals make choices in front of the veil of ignorance and know their position. Finally, we discuss situations in which income is determined by interdependent rather than individual choices. In the closing parts of the paper we discuss whether and how these experimental results speak to the redistribution issues of pensions. For example, do they argue for or against mandatory participation? Should we have less redistribution and more actuarial fairness? How does this depend on the type of redistribution involved?

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5090.

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Length: 44 pages
Date of creation: Jul 2010
Date of revision:
Handle: RePEc:iza:izadps:dp5090

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Keywords: insurance; pension; fairness; redistribution; experiment;

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Cited by:
  1. May Elsayyad & Kai A. Konrad, 2010. "Fighting Multiple Tax Havens," CESifo Working Paper Series 3195, CESifo Group Munich.
  2. Fabian Paetzel & Rupert Sausgruber & Stefan Traub, 2014. "Social Preferences and Voting on Reform: An Experimental Study," Department of Economics Working Papers wuwp172, Vienna University of Economics, Department of Economics.
  3. Anke Gerber & Andreas Nicklisch & Stefan Voigt, 2013. "Strategic Choices for Redistribution and the Veil of Ignorance: Theory and Experimental Evidence," CESifo Working Paper Series 4423, CESifo Group Munich.
  4. Riedl A.M. & Cettolin E., 2013. "Justice under uncertainty," Research Memorandum, Maastricht University, Graduate School of Business and Economics (GSBE) 036, Maastricht University, Graduate School of Business and Economics (GSBE).

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