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Identifying latent interest-groups: An analysis of heterogeneous preferences for income-redistribution

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  • Pfarr, Christian
  • Schmid, Andreas
  • Mørkbak, Morten Raun

Abstract

The German government is strongly involved in redistributing income. For various reasons such as the capacity to govern and social stability this makes a good un-derstanding of the citizens’ respective preferences and their informal coalitions ex-tremely important. The identification of such interest groups is non-trivial as they may be determined by latent characteristics and preferences for redistribution are difficult to measure. The aim of this study is to identify latent interest-groups in the context of preferences for redistribution adopting an inductive approach. The data for the estimation of the WTP values is generated by a DCE, based on a rep-resentative sample of 1,538 German individuals. To identify the latent interest-groups we investigate to which extent respondents can be divided into groups us-ing Latent Class Models thereby accounting for both observable and unobservable heterogeneity within the society. Based on the econometric analysis we can identi-fy six social interest groups that differ regarding their preferences for redistribu-tion and their composition. Both, their preferences regarding the overall budget for redistribution and their preferences regarding the different recipient groups as well as the socio-demographic determinants for group membership are plausible and match well with the current political situation in Germany.

Suggested Citation

  • 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.
  • Handle: RePEc:pra:mprapa:58823
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    References listed on IDEAS

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    Keywords

    redistribution; interest groups; preferences; choice experiments; latent class models;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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