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

  • Agathe Rouaix
  • Charles Figuières
  • Marc Willinger

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
File Function: First version, 2013
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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. Chan, Kenneth S. & Mestelman, Stuart & Muller, R. Andrew, 2008. "Voluntary Provision of Public Goods," Handbook of Experimental Economics Results, Elsevier.
  2. Ruben Durante & Louis Putterman & Joël Weele, 2014. "Preferences For Redistribution And Perception Of Fairness: An Experimental Study," Journal of the European Economic Association, European Economic Association, vol. 12(4), pages 1059-1086, 08.
  3. Ken Yamada & Hisahiro Naito, 2004. "An empirical examination of household public goods provision," Econometric Society 2004 North American Summer Meetings 474, Econometric Society.
  4. Anderson, Lisa R. & Mellor, Jennifer M. & Milyo, Jeffrey, 2008. "Inequality and public good provision: An experimental analysis," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(3), pages 1010-1028, June.
  5. 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.
  6. 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.
  7. Agathe Rouaix & Jonathan Maurice & Marc Willinger, 2013. "Income redistribution and public good provision : an experiment," Working Papers 286313, Institut National de la Recherche Agronomique, France.
  8. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  9. Andre Hofmeyr & Justine Burns & Martine Visser, 2007. "Income Inequality, Reciprocity And Public Good Provision: An Experimental Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 75(3), pages 508-520, 09.
  10. Piketty Thomas, 1993. "Implementation of First-Best Allocations via Generalized Tax Schedules," Journal of Economic Theory, Elsevier, vol. 61(1), pages 23-41, October.
  11. Werner Güth & Kerstin Pull & Manfred Stadler & Agnes Stribeck, 2010. "Equity versus Efficiency? Evidence from Three-Person Generosity Experiments," Games, MDPI, Open Access Journal, vol. 1(2), pages 89-102, April.
  12. Cherry, Todd L. & Kroll, Stephan & Shogren, Jason F., 2005. "The impact of endowment heterogeneity and origin on public good contributions: evidence from the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 57(3), pages 357-365, July.
  13. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09iatskih21 is not listed on IDEAS
  14. 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.
  15. Alberto F. Alesina & Paola Giuliano, 2009. "Preferences for Redistribution," NBER Working Papers 14825, National Bureau of Economic Research, Inc.
  16. Juergen Bracht & Charles Figuières & Marisa Ratto, 2004. "Relative performance of two simple incentive mechanisms in a public good experiment," IDEP Working Papers 0409, Institut d'economie publique (IDEP), Marseille, France.
  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.
  18. 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.
  19. 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.
  20. Nikolaos Georgantzís & Antonios Proestakis, 2011. "Accounting for real wealth in heterogeneous-endowment public good games," ThE Papers 10/20, Department of Economic Theory and Economic History of the University of Granada..
  21. Brunner, Eric J, 1997. " An Empirical Test of Neutrality and the Crowding-Out Hypothesis," Public Choice, Springer, vol. 92(3-4), pages 261-79, September.
  22. repec:inr:wpaper:22970 is not listed on IDEAS
  23. 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.
  24. 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.
  25. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
  26. 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.
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