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Robin-Hooding Rents: Exploiting the Pecuniary Effects of In-Kind Programs

  • Richard Zeckhauser
  • Steve Coate
  • Stephen Johnson

The pecuniary effects of cash and in-kind programs differ. A program that builds housing for the poor, for example, is likely to result in a lower price of existing low-income housing than would an equally costly cash transfer program. Low-income renters in general would benefit; landlords would lose. The process we label Robin-Hooding rents employs in-kind programs to transfer rents from one group in society to another, Direct taxation of "donor" groups may be infeasible because their incomes can't be monitored, they are engaged in illegal activities, they are foreign, or the government's administrative apparatus is ineffective. A general equilibrium analysis reveals that absent the ability to target taxation, Robin-Hooding may be a valuable second-best transfer instrument. Robin-Hooding also has drawbacks, Its incentive effects are significant, for today's rents flow from yesterday's investment activities. Moreover, even when Robin-Hooding is undesirable, parochial government agencies may be tempted to employ it as a means to escape the scrutiny of the budget process. The real world use of Robin-Hooding in both developed and developing nations is discussed.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4125.

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Date of creation: Jul 1992
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Handle: RePEc:nbr:nberwo:4125
Note: PE
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  1. 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.
  2. Blackorby, Charles & Donaldson, David, 1988. "Cash versus Kind, Self-selection, and Efficient Transfers," American Economic Review, American Economic Association, vol. 78(4), pages 691-700, September.
  3. Usher, Dan, 1977. "The welfare economics of the socialization of commodities," Journal of Public Economics, Elsevier, vol. 8(2), pages 151-168, October.
  4. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-84, September.
  5. Thurow, Lester C, 1974. "Cash Versus In-Kind Transfers," American Economic Review, American Economic Association, vol. 64(2), pages 190-95, May.
  6. Chari, V V & Kehoe, Patrick J, 1990. "Sustainable Plans," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 783-802, August.
  7. Nichols, Albert L & Zeckhauser, Richard J, 1982. "Targeting Transfers through Restrictions on Recipients," American Economic Review, American Economic Association, vol. 72(2), pages 372-77, May.
  8. Stiglitz, Joseph E., 1982. "Self-selection and Pareto efficient taxation," Journal of Public Economics, Elsevier, vol. 17(2), pages 213-240, March.
  9. Bruce, Neil & Waldman, Michael, 1991. "Transfers in Kind: Why They Can Be Efficient and Nonpaternalistic," American Economic Review, American Economic Association, vol. 81(5), pages 1345-51, December.
  10. Dani Rodrik & Richard Zeckhauser, 1987. "The dilemma of government responsiveness," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 7(4), pages 601-620.
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