Income Redistribution and Public Good Provision: an Experiment
AbstractWe provide a new experimental investigation of the neutrality theorem of Warr (1983), who states ”when a single public good is provided at positive levels by private individuals, its provision is unaffected by a redistribution of income”. Instead of comparing different income distributions across groups as Chan et al. (1996), in our experiment the total group endowment is redistributed after a 10 rounds sequence. We compare an unequalizing redistribution (EI) and an equalizing redistribution (IE), to two benchmark treatments for which the 10 rounds sequence is repeated, either with an equal distribution (EE) or an unequal distribution (II). The constituent game has a unique interior dominant strategy equilibrium. Our data support the neutrality theorem (after controlling for the restart effect): redistribution has no effect on the total amount of public good in none of the tested treatments. However, the analysis of individual behavior shows that ”poor” subjects over-contribute with respect to their Nash-contribution, while ”rich” subjects tend to play their Nash-contribution or under-contribute slightly. Furthermore, after a redistribution, subjects react asymetrically: subjects who get poorer reduce their contribution of a larger amount than the amount of contribution added by subjects who become richer. And it is shown that the latter do not react enough to the redistribution.
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Bibliographic InfoPaper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 09-12.
Length: 44 pages
Date of creation: Nov 2009
Date of revision: Jun 2011
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Web page: http://www.lameta.univ-montp1.fr/
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Other versions of this item:
- Jonathan Maurice & Agathe Rouaix & Marc Willinger, 2013. "Income Redistribution And Public Good Provision: An Experiment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54, pages 957-975, 08.
- NEP-ALL-2009-12-11 (All new papers)
- NEP-CBE-2009-12-11 (Cognitive & Behavioural Economics)
- NEP-EXP-2009-12-11 (Experimental Economics)
- NEP-PBE-2009-12-11 (Public Economics)
- NEP-PUB-2009-12-11 (Public Finance)
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