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The trade-off between welfare and equality in a public good experiment

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  • Agathe Rouaix
  • Charles Figuières
  • Marc Willinger

Abstract

We report the results of an experiment on voluntary contributions to a public good in which we implement a redistribution of the group endowment among group members in a lump sum manner. We study the impact of redistribution on group contribution, on individuals’ contribu- tions according to their endowment and on welfare. Our experimental results show that welfare increases when equality is broken, as predicted by theory (Itaya, De Meza & Myles, 1997), because the larger contribution of the rich subjects overcompensates the lower contribution of the poor subjects. Last but not least, agents’ behavior in situations of inequality of income, depends on initial conditions. In particular, the decisions of those who become poor seem to express a form of protest against the new distribution of incomes compared to those who started out as poor: from a behavioral point of view, being poor is therefore not equivalent to becoming poor.

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File URL: http://www.lameta.univ-montp1.fr/Documents/DR2013-03.pdf
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Bibliographic Info

Paper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 13-03.

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Length: 26 pages
Date of creation: Feb 2013
Date of revision: Feb 2013
Handle: RePEc:lam:wpaper:13-03

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  1. Bracht, Juergen & Figuières, Charles & Ratto, Marisa, 2008. "Relative performance of two simple incentive mechanisms in a public goods experiment," Economics Papers from University Paris Dauphine 123456789/4809, Paris Dauphine University.
  2. Kenneth S. Chan & Stuart Mestelman & Rob Moir & R. Andrew Muller, 1998. "Heterogeneity and the Voluntary Provision of Public Goods," Department of Economics Working Papers 1998-04, McMaster University.
  3. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December.
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  6. Andre Hofmeyr & Justine Burns & Martine Visser, 2008. "Income Inequality, Reciprocity and Public Good Provision: An Experimental Analysis," SALDRU Working Papers 23, Southern Africa Labour and Development Research Unit, University of Cape Town.
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  8. Juergen Bracht & Charles Figuieres & Marisa Ratto, 2008. "Relative performance of two simple incentive mechanisms in a public goods experiment," Working Papers 22970, Institut National de la Recherche Agronomique, France.
  9. Jonathan Maurice & Marc Willinger & Agathe Rouaix, 2009. "Income Redistribution and Public Good Provision: an Experiment," Working Papers 09-12, LAMETA, Universtiy of Montpellier, revised Jun 2011.
  10. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
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  12. Lisa R. Anderson & Jennifer M. Mellor & Jeffrey Milyo, 2004. "Inequality and Public Good Provision: An Experimental Analysis," Working Papers 12, Department of Economics, College of William and Mary.
  13. Bagnoli, Mark & McKee, Michael, 1991. "Voluntary Contribution Games: Efficient Private Provision of Public Goods," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 351-66, April.
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  17. Bullock, David S, 1995. "Are Government Transfers Efficient? An Alternative Test of the Efficient Redistribution Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1236-74, December.
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  19. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
  20. Keser, Claudia, 1996. "Voluntary contributions to a public good when partial contribution is a dominant strategy," Economics Letters, Elsevier, vol. 50(3), pages 359-366, March.
  21. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
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  23. Itaya, Jun-ichi & de Meza, David & Myles, Gareth D., 1997. "In praise of inequality: public good provision and income distribution," Economics Letters, Elsevier, vol. 57(3), pages 289-296, December.
  24. Piketty Thomas, 1993. "Implementation of First-Best Allocations via Generalized Tax Schedules," Journal of Economic Theory, Elsevier, vol. 61(1), pages 23-41, October.
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