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Income redistribution: how to divide the pie?

Author

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  • Neustadt, Ilja
  • Zweifel, Peter

Abstract

In this paper, we elicit preferences of Swiss citizens for the allocation of income redistribution to different uses through a Discrete Choice Experiment performed in 2008. Neustadt and Zweifel (2009} provide an estimate of the total desired amount of income redistribution as a share of disposable income. Here, we estimate marginal willingness-to-pay values for types of recipients (old-age pensioners, people with ill health, the unemployed, working poor, and families with children) and their nationality (Swiss, citizens of western European countries, others). Hypotheses derived from the insurance motive for redistribution receive some empirical support.

Suggested Citation

  • Neustadt, Ilja & Zweifel, Peter, 2011. "Income redistribution: how to divide the pie?," MPRA Paper 35427, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:35427
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    File URL: https://mpra.ub.uni-muenchen.de/35427/2/MPRA_paper_35427.pdf
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    References listed on IDEAS

    as
    1. Ilja Neustadt & Peter Zweifel, 2009. "Economic Well-Being, Social Mobility, and Preferences for Income Redistribution: Evidence from a Discrete Choice Experiment," SOI - Working Papers 0909, Socioeconomic Institute - University of Zurich, revised Jan 2010.
    2. 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.
    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. Roland Bénabou & Jean Tirole, 2006. "Belief in a Just World and Redistributive Politics," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 699-746.
    5. Nicola Persico & Alessandro Lizzeri, 2001. "The Provision of Public Goods under Alternative Electoral Incentives," American Economic Review, American Economic Association, vol. 91(1), pages 225-239, March.
    6. Alberto Alesina & George-Marios Angeletos, 2005. "Fairness and Redistribution," American Economic Review, American Economic Association, vol. 95(4), pages 960-980, September.
    7. 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.
    8. Tito Boeri & Axel Börsch-Supan & Guido Tabellini, 2001. "Would you like to shrink the welfare state? A survey of European citizens," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 7-50, April.
    9. Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D., 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304.
    10. Arne Risa Hole, 2007. "A comparison of approaches to estimating confidence intervals for willingness to pay measures," Health Economics, John Wiley & Sons, Ltd., vol. 16(8), pages 827-840.
    11. Ilja Neustadt, 2011. "Do Religious Beliefs Explain Preferences for Income Redistribution? Experimental Evidence," CESifo Economic Studies, CESifo, vol. 57(4), pages 623-652, December.
    12. Alberto F. Alesina & Paola Giuliano, 2009. "Preferences for Redistribution," NBER Working Papers 14825, National Bureau of Economic Research, Inc.
    13. Hensher, David & Louviere, Jordan & Swait, Joffre, 1998. "Combining sources of preference data," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 197-221, November.
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    17. Sule Akkoyunlu & Ilja Neustadt & Peter Zweifel, 2009. "Why does the amount of income redistribution differ between the United States and Europe?," KOF Working papers 09-228, KOF Swiss Economic Institute, ETH Zurich.
    18. Mandy Ryan, 2004. "A comparison of stated preference methods for estimating monetary values," Health Economics, John Wiley & Sons, Ltd., vol. 13(3), pages 291-296.
    19. 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.
    20. Fong, Christina, 2001. "Social preferences, self-interest, and the demand for redistribution," Journal of Public Economics, Elsevier, vol. 82(2), pages 225-246, November.
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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. Pfarr, Christian & Schmid, Andreas & Mørkbak, Morten Raun, 2015. "Latent characteristics and preferences for income redistribution," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113001, Verein für Socialpolitik / German Economic Association.
    3. Pfarr, Christian & Schmid, Andreas & Mørkbak, Morten Raun, 2014. "Identifying latent interest-groups: An analysis of heterogeneous preferences for income-redistribution," MPRA Paper 58823, University Library of Munich, Germany.

    More about this item

    Keywords

    Income redistribution; preferences; willingness to pay; discrete choice experiments; conjoint analysis; social status;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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