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An Experimental Study of the POUM Hypothesis

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  • Checchi, Daniele

    ()
    (University of Milan)

  • Filippin, Antonio

    ()
    (University of Milan)

Abstract

The “prospect of upward mobility” (POUM) hypothesis formalised by Benabou and Ok (2001a) finds explicit assumptions under which some individuals that are poorer than the average optimally choose to oppose redistribution policies. The underlying intuition is that these individuals rationally expect to be richer than average in the future. This result holds provided the mobility process is concave in expectations, redistribution policies are expected to last for a sufficiently long period and individuals are not too risk averse. This paper tests the POUM hypothesis by means of a within subjects experiment where the concavity of the mobility process, the degree of social mobility, the knowledge of personal income and the degree of inequality are used as treatments. Other determinants of the demand for redistribution, such as risk aversion and inequality aversion are (partially) controlled for via either the experiment design or the information collected during the experiment. We find that the POUM hypothesis holds under alternative specifications, even when we control for individual fixed effects.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 912.

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Length: 24 pages
Date of creation: Oct 2003
Date of revision:
Publication status: published in: Research on Economic Inequality, 2004, 11, 15-136
Handle: RePEc:iza:izadps:dp912

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Keywords: POUM; redistribution; mobility; experiment;

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References

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  1. Corneo, Giacomo & Grüner, Hans Peter, 2001. "Individual Preferences for Political Redistribution," CEPR Discussion Papers 2694, C.E.P.R. Discussion Papers.
  2. R. Bénabou & E. Ok, . "Mobility as Progressivity: Ranking Income Processes According to Equality of Opportunity," Princeton Economic Theory Papers 00f1, Economics Department, Princeton University.
  3. Alberto Alesina & Eliana La Ferrara, . "Preferences for Redistribution in the Land of Opportunities," Working Papers 178, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. Thomas Piketty, 1994. "Social Mobility and Redistributive Politics," Working papers 94-15, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Roland Bénabou & Efe A. Ok, 2001. "Social Mobility And The Demand For Redistribution: The Poum Hypothesis," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 447-487, May.
  6. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  7. Cowell, Frank A. & Schokkaert, Erik, 2001. "Risk perceptions and distributional judgments," European Economic Review, Elsevier, vol. 45(4-6), pages 941-952, May.
  8. Ignacio Palacios-Huerta & Roberto Serrano & Oscar Volig, 2001. "Rejecting Small Gambles under Expected Utility: a Comment on Rabin," Working Papers 2001-05, Brown University, Department of Economics.
  9. Hans Peter Gruner & Giacomo Corneo, 2000. "Social Limits to Redistribution," American Economic Review, American Economic Association, vol. 90(5), pages 1491-1507, December.
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Citations

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Cited by:
  1. Claudia M. Buch & Christoph Engel, 2012. "Effort and Redistribution: Better Cousins Than One Might Have Thought," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2012_10, Max Planck Institute for Research on Collective Goods, revised Mar 2013.
  2. Morrow, John & Carter, Michael, 2013. "Left, right, left: income, learning and political dynamics," MPRA Paper 45020, University Library of Munich, Germany.
  3. repec:ese:iserwp:2007-21 is not listed on IDEAS
  4. Ilja Neustadt & Peter Zweifel, 2010. "Is the Welfare State Sustainable? Experimental Evidence on Citizens’ Preferences for Redistribution," SOI - Working Papers 1003, Socioeconomic Institute - University of Zurich.
  5. Pfarr, Christian & Ulrich, Volker, 2011. "Discrete-Choice-Experimente zur Ermittlung der Präferenzen für Umverteilung
    [Discrete-Choice-Experiments to elicit individuals' preferences for redistribution]
    ," MPRA Paper 31707, University Library of Munich, Germany.
  6. Pasquier-Doumer, Laure, 2010. "Perception de l’inégalité des chances et mobilités objective et subjective au Pérou," Economics Papers from University Paris Dauphine 123456789/4382, Paris Dauphine University.
  7. Claudia M. Buch & Christoph Engel, 2012. "The Tradeoff Between Redistribution and Effort: Evidence from the Field and from the Lab," CESifo Working Paper Series 3808, CESifo Group Munich.
  8. Michael Carter & John Morrow, 2012. "Left, Right, Left: Income Dynamics And The Evolving Political Preferences Of Forward-Looking Bayesian Voters," STICERD - Economic Organisation and Public Policy Discussion Papers Series 034, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.

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