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Preferences for redistribution and pensions: what can we learn from experiments?

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  • Tausch, F.

    (Microeconomics & Public Economics)

  • Potters, J.
  • Riedl, A.M.

    (Microeconomics & Public Economics)

Abstract

Redistribution is an inevitable feature of collective pension schemes and economic experiments have revealed that most people have a preference for redistribution that is not merely inspired by self-interest. However, little is known on how these preferences interact with preferences for different pension schemes. In this paper, we review the experimental evidence on preferences for redistribution and suggest some links to redistribution through pensions. For that purpose we distinguish between three types of situations. The first deals with distributional preferences behind a veil of ignorance. In the second type of situation, individuals make choices in front of the veil of ignorance and know their position. Finally, we discuss situations in which income is determined by interdependent rather than individual choices. In the closing sections of the paper, we discuss whether and how these experimental results speak to the redistribution issues of pensions. For example, do they argue for or against mandatory participation? Should we have less redistribution and more actuarial fairness? How does this depend on the type of redistribution involved?
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  • Tausch, F. & Potters, J. & Riedl, A.M., 2011. "Preferences for redistribution and pensions: what can we learn from experiments?," Research Memorandum 014, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  • Handle: RePEc:unm:umamet:2011014
    DOI: 10.26481/umamet.2011014
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    Cited by:

    1. Rivera-Rozo, J.A. (Jairo) & García-Huitrón, M.E. (Manuel) & Steenbeek, O.W. (Onno) & van der Lecq, S.G. (Fieke), 2018. "National culture and the configuration of public pensions," Journal of Comparative Economics, Elsevier, vol. 46(2), pages 457-479.
    2. Gerber, Anke & Nicklisch, Andreas & Voigt, Stefan, 2019. "The role of ignorance in the emergence of redistribution," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 239-261.
    3. Elsayyad, May & Konrad, Kai A., 2012. "Fighting multiple tax havens," Journal of International Economics, Elsevier, vol. 86(2), pages 295-305.
    4. Elena Cettolin & Arno Riedl, 2017. "Justice Under Uncertainty," Management Science, INFORMS, vol. 63(11), pages 3739-3759, November.
    5. Paetzel, Fabian & Sausgruber, Rupert & Traub, Stefan, 2014. "Social preferences and voting on reform: An experimental study," European Economic Review, Elsevier, vol. 70(C), pages 36-55.
    6. Nyberg, Sten & Priks, Mikael, 2017. "Public order and private payments: Evidence from the Swedish soccer league," Journal of Public Economics, Elsevier, vol. 153(C), pages 1-8.
    7. van Dalen, Harry & Henkens, Kene, 2018. "Do people really want freedom of choice? : Assessing preferences of pension holders," Other publications TiSEM 448e8a93-9ded-401f-9da0-7, Tilburg University, School of Economics and Management.
    8. Anke Gerber & Andreas Nicklisch & Stefan Voigt, 2013. "Strategic Choices for Redistribution and the Veil of Ignorance: Theory and Experimental Evidence," CESifo Working Paper Series 4423, CESifo.
    9. Pellicer, Miquel & Piraino, Patrizio & Wegner, Eva, 2019. "Perceptions of inevitability and demand for redistribution: Evidence from a survey experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 274-288.

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    More about this item

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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