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An Experimental Study of the POUM Hypothesis

Author

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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.

Suggested Citation

  • Checchi, Daniele & Filippin, Antonio, 2003. "An Experimental Study of the POUM Hypothesis," IZA Discussion Papers 912, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp912
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    References listed on IDEAS

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    1. Amiel,Yoram & Cowell,Frank, 1999. "Thinking about Inequality," Cambridge Books, Cambridge University Press, number 9780521466967.
    2. Thomas Piketty, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 551-584.
    3. Roland Benabou & Efe A. Ok, 2001. "Social Mobility and the Demand for Redistribution: The Poum Hypothesis," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 447-487.
    4. Corneo, Giacomo & Gruner, Hans Peter, 2002. "Individual preferences for political redistribution," Journal of Public Economics, Elsevier, vol. 83(1), pages 83-107, January.
    5. R. Bénabou & E. Ok, 2000. "Mobility as Progressivity: Ranking Income Processes According to Equality of Opportunity," Princeton Economic Theory Papers 00f1, Economics Department, Princeton University.
    6. Alesina, Alberto & La Ferrara, Eliana, 2005. "Preferences for redistribution in the land of opportunities," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 897-931, June.
    7. 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.
    8. Hans Peter Gruner & Giacomo Corneo, 2000. "Social Limits to Redistribution," American Economic Review, American Economic Association, vol. 90(5), pages 1491-1507, December.
    9. 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 914-927, October.
    10. Cowell, Frank A. & Schokkaert, Erik, 2001. "Risk perceptions and distributional judgments," European Economic Review, Elsevier, vol. 45(4-6), pages 941-952, May.
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    Citations

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    Cited by:

    1. 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.
    2. Sergio Beraldo & Massimiliano Piacenza & Gilberto Turati, 2014. "«Must Reward Hard Work»? An Experiment on Personal Responsibility and Preferences for Redistribution," CSEF Working Papers 377, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    3. 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.
    4. Claudia M. Buch & Christoph Engel, 2012. "The Tradeoff between Redistribution and effort: Evidence from the Field and from the Lab," IAW Discussion Papers 81, Institut für Angewandte Wirtschaftsforschung (IAW).
    5. Pfarr Christian & Ulrich Volker, 2011. "Discrete-Choice-Experimente zur Ermittlung der Präferenzen für Umverteilung," Review of Economics, De Gruyter, vol. 62(3), pages 232-262, December.
    6. repec:dau:papers:123456789/4382 is not listed on IDEAS
    7. Rainer, Helmut & Siedler, Thomas, 2008. "Subjective income and employment expectations and preferences for redistribution," Economics Letters, Elsevier, vol. 99(3), pages 449-453, June.
    8. Morrow, John & Carter, Michael, 2013. "Left, right, left: income, learning and political dynamics," MPRA Paper 45020, University Library of Munich, Germany.
    9. Claudia M. Buch & Christoph Engel, 2012. "Effort and Redistribution: Better Cousins Than One Might Have Thought," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2012_10, Max Planck Institute for Research on Collective Goods, revised Sep 2014.

    More about this item

    Keywords

    POUM; redistribution; mobility; experiment;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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