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Social Norms and Economic Incentives in the Welfare State

Author

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  • Lindbeck, Assar

    (Research Institute of Industrial Economics (IFN))

  • Nyberg, Sten

    (Research Institute of Industrial Economics (IFN))

  • Weibull, Jörgen W.

    (Research Institute of Industrial Economics (IFN))

Abstract

This paper analyzes the interplay between social norms and economic incentives in the context of work decisions in the modern welfare state. We assume that to live off one's own work is a social norm, and that the larger the population fraction adhering to this norm, the more intensely it is felt by the individual. Individuals face two choices, one economic, whether to work or live off public transfers, and one political, how large the transfer should be. The model highlights certain factors determining the size of the welfare state.

Suggested Citation

  • Lindbeck, Assar & Nyberg, Sten & Weibull, Jörgen W., 1997. "Social Norms and Economic Incentives in the Welfare State," Working Paper Series 476, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0476
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    References listed on IDEAS

    as
    1. Lindbeck, A & Nyberg, S & Weibull, J-W, 1996. "Social Norms, the Welfare State, and Voting," Papers 608, Stockholm - International Economic Studies.
    2. Basu, Kaushik, 1987. "Monopoly, quality uncertainty and 'status' goods," International Journal of Industrial Organization, Elsevier, vol. 5(4), pages 435-446.
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    6. Lindbeck, A., 1994. "Welfare State Disincentives with Endogenous Habits and Norms," Papers 589, Stockholm - International Economic Studies.
    7. George A. Akerlof, 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(4), pages 749-775.
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    More about this item

    Keywords

    Welfare Economics; Decision Making; Incentives;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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