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Social Capital, Household Income, and Preferences for Income Redistribution
Abstract
This paper explores how social capital influences individual preferences for income redistribution. Social capital is measured by participation in community activities. After controlling for individual characteristics, I find that people are more likely to express preferences for income redistribution in areas with higher rates of community participation. This is more clearly so in high-income groups than in low-income groups. I infer that individuals' preferences for income redistribution are influenced by psychological externalities. Because the data is from surveys, I also consider the role of expressive behavior. I also consider the hypothesis that behavior is influenced by social distance.
... The share of total public social expenditure over GDP is high in Nordic and Continental European countries. Nordic countries are 4 Shared societal values influence individuals' perceptions regarding redistribution and the welfare state (e.g., Gordon, 1989;Alesina and Angeletos, 2005;Wenzel, 2004Wenzel, , 2005aWenzel, , 2005bKlor andShayo, 2007, 2010;Luttens and Valfort, 2011;Yamamura 2012;2014). 5 Notably, Nekby and Pettersson-Lidbom (2017) provided evidence of no relation between ethnic diversity and preference for redistribution. ...
... 5 Notably, Nekby and Pettersson-Lidbom (2017) provided evidence of no relation between ethnic diversity and preference for redistribution. 6 Many studies assessed the determinants of preference for redistribution (e.g., Ravallion and Lokshin, 2000;Fong, 2001;Corneo and Grüner, 2002;Alesina and La Ferrara, 2005;Luttmer and Singhal, 2011;Yamamura, 2012). characterized by high trust and low corruption whereas, Continental European countries are attributed with low trust and high corruption (Algan et al., 2016, 862). ...
... Regarding basic information, the respondents were asked about their age, residential prefecture, educational background, job status, marital status, and the number of children. As described in Table 1, various subjective views were asked, such as perceived tax burden and preference for redistribution, which were generally used in existing works (e.g., Corneo and Grüner, 2002;Ohtake and Tomioka, 2004;Alesina and La Ferrara, 2005;Alesina and Giuliano, 2009;Yamamura, 2012Yamamura, , 2014. In addition, the questionnaire includes a question about views regarding irreciprocity and competition. ...
A customized internet survey experiment is conducted in Japan to examine how individuals' relative income position influences preferences for income redistribution and individual perceptions regarding income tax burden. I first asked respondents about their perceived income position in their country and their preferences for redistribution and perceived tax burden. In the follow-up survey for the treatment group, I provided information on their true income position and asked the same questions as in the first survey. For the control group, I did not provide their true income position and asked the same questions. I gathered a large sample that comprised observations of the treatment group (4,682) and the control group (2,268). The key findings suggest that after being informed of individuals' real income position, (1) individuals who thought their income position was higher than the true one perceived their tax burden to be larger, (2) individuals' preference for redistribution hardly changes, and (3) irreciprocal individuals perceive their tax burden to be larger and are more likely to prefer redistribution. However, the share of irreciprocal ones is small. This leads Japan to be a non-welfare state.
... The second group of studies focus on the determinants of individual preferences for redistribution, with some evaluating the role of income inequality on redistributive preferences (e.g. Alesina and Giuliano, 2011;Yamamura, 2012;Pittau et al., 2013;Kerr, 2014;Olivera, 2015;Roth and Wohlfart, 2018;Dimick et al., 2016). ...
... The same motives may have opposing implications for the way generosity of redistribution 2 A number of studies utilize measures of inequality and redistribution at the country level and across periods to account for the effect of inequality on preferences for redistribution (e.g. Yamamura, 2012;Pittau et al., 2013;Kerr, 2014;Olivera, 2015;Roth and Wohlfart, 2018). However, we consider that this strategy gives only an approximate perspective about the role of the structure of taxation and benefits in the country on preferences for redistribution. ...
... The nature of this variable is ordinal, that is the scale only represents a qualitative value rather than a specific quantitative measure, and therefore, our baseline estimation strategy always involves ordered probit models. 5 This strategy has also been used by Fong (2001), Alesina and La Ferrara (2005), Yamamura (2012) and Guillaud (2013). To facilitate interpretation, we also report marginal effects of probit models and regression results including alternative measurements for the dependent variable (looking in particular at the probability of agreeing or strongly agreeing with the relevant preference for redistribution question). ...
This paper provides evidence that attitudes towards redistribution are associated with the extent of generosity of the redistributive context experienced by the individual, as measured by the likelihood of receiving positive benefit transfers net of fiscal contribution. We estimate reduced form tax-benefit equations with the EU Statistics on Income and Living Conditions (EU-SILC), and match the implied parameters to the respondents of the European Social Survey (ESS) on the basis of their characteristics. The period of analysis is 2008–2016. For identification, we exploit exogenous cross-country and time variation in tax rules and market income to disentangle implications of exposure to tax-benefit rules on preferences for redistribution from the effects of changes in income inequality. We find that exposure to positive net benefits increases support for redistribution by 1.4%–3% on baseline models, the effect being robust across a variety of specifications.
... While this information falls beyond the scope of the Afrobarometer survey, we do have information about an element that has been identified as a determinant of preferences for redistribution, which is the level of interaction between people. Yamamura (2012) finds that people who are more engaged in community activities also tend to support higher levels of redistribution. We therefore include in our specifications an indicator of whether respondents belong to some voluntary association or community group, which we take as a proxy of their "participative" character. ...
... One could argue that having a broader social network could increase the chances of knowing a close friend or relative who was infected or died during the outbreak. Social capital, more broadly defined, is also likely to be correlated with redistributive preferences (see Yamamura, 2012). We therefore include a control for whether the individual participates in community meetings to mitigate this effect. ...
We explore the impact of the Ebola epidemic on attitudes toward taxation for development in West Africa. Utilising representative surveys from before and after the peak of the crisis, we estimate the impact of Ebola using both objective (recorded case rates) and self-reported measures of exposure (knowing a friend/relative who was infected with/died from Ebola). In addition, we consider the indirect impact of Ebola on redistributive preferences through disruption to different domains of life, including school, work, social gatherings, and medical care. Our empirical analysis demonstrates that higher levels of Ebola exposure and disruption are associated with greater levels of support for taxation for development.
... While this information falls beyond the scope of the Afrobarometer survey, we do have information about an element that has been identied as a determinant of preferences for redistribution, which is the level of interaction between people. Yamamura (2012) nds that people who are more engaged in community activities also tend to support higher levels of redistribution. We therefore include in our specications an indicator of whether respondents belong to some voluntary association or community group and we take it as a proxy of their participative character. ...
... One could argue that having a broader social network could increase the chances of knowing a close friend or relative who was infected or died during the outbreak. Social capital, more broadly dened, is also likely to be correlated with redistributive preferences (see Yamamura, 2012). We therefore include a control for whether the individual participates in community meetings to mitigate this eect. ...
We explore the impact of the Ebola epidemic on attitudes towards taxation for development in West Africa. Utilising representative surveys from before and after the peak of the crisis, we estimate the impact of Ebola using both objective (recorded case rates) and self-reported (knowing a friend/relative who was infected/died from Ebola) measures of exposure. In addition, we consider the indirect impact of Ebola on redistributive preferences through disruption to different domains of life, including: school, work, social gatherings and medical care. Our empirical analysis demonstrates that higher levels of Ebola exposure and disruption are associated with greater levels of support for taxation for development.
... These indices are often constructed using socially relevant groupings, such as race/ethnicity, gender, education, caste, income, occupation, socioeconomic status, and social capital. (Macinko and Starfield, 2001;Mitchell and Popham, 2008;Teresa et al., 2008;Yamamura, 2012;Arcaya et al., 2015;Niessen et al., 2018). Further, these studies also focus on the identified causes of health inequalities and strategies for reducing and eliminating them, which are mainly based on relative income hypothesis, relative position hypothesis and income inequality hypothesis (Wagstaff and Doorslaer, 2000). ...
... The family gift expenditure variable is regarded as the proxy variable of social capital because the interaction of social networks is directly reflected in the expenditure on gifts between relatives and friends (Yamamura, 2012). ...
Introduction
The rapid increases in income and high-speed rail (HSR) construction in China raise the prospect of reshaping the space economy, the exploration of which, from the perspective of optimised transportation networks, can provide insights into alleviating the increasing health inequalities.
Methods
Based on matched data of prefecture-level cities and Chinese Labor Dynamic Survey packages from 2014 to 2018, we used the ordered probit model and ordinary least squares (OLS) with time- and city-fixed effects to estimate the effects of HSR on personal health status. We calculated the degree of income-related health inequalities and decomposed the contributive degree of HSR to health inequalities by decomposing the concentration index (CI) and Blinder-Oaxaca, respectively.
Results
Personal health status showed significant differences under different income levels and in areas with and without HSR. The estimated coefficients regarding HSR on personal health status were 0.112 in the ordered probit model and 0.167 in the OLS model. The CI of health inequalities showed a positive coefficient of 0.059, with a pro-rich phenomenon. Contribution decomposition of CI showed that HSR accounted for an important contribution of 1.919% to health inequalities. Blinder-Oaxaca decomposition revealed that the contribution of HSR to overall CI was 0.075% from 2014 to 2018. CI decomposition also demonstrated a decreasing trend over time in the HSR's contribution to increasing health inequalities. Further, mechanism analysis showed that HSR improved health more significantly among high-income groups in ways that included improved high quality of healthcare services, socioeconomic status, and social capital.
Conclusions
There is a pro-rich distribution of health in China, and HSR exacerbates health inequalities more significantly among high-income groups in several ways, including high-quality healthcare services, socioeconomic status, and social capital. Furthermore, HSR has the potential to decrease health inequalities in the future.
... All independent variables show a positive and significant relationship with objective well-being except education and gender. These results are also consistent with past studies that included similar socio-demographic variables (Maluccio et al., 1999;Robison et al., 2011;Yamamura, 2012). In the 4th model, all dimensions of social capital are positively and significantly associated with life satisfaction of individuals, which was in line with the findings of Kawachi and Berkman (2000), Fujisawa et al. (2009), Modie-Moroka (2009, and Arezzo and Giudici (2017) These results are consistent with past researches which included similar socio-demographic variables (Maluccio et al., 1999;Robison et al., 2011;Yamamura, 2012). ...
... These results are also consistent with past studies that included similar socio-demographic variables (Maluccio et al., 1999;Robison et al., 2011;Yamamura, 2012). In the 4th model, all dimensions of social capital are positively and significantly associated with life satisfaction of individuals, which was in line with the findings of Kawachi and Berkman (2000), Fujisawa et al. (2009), Modie-Moroka (2009, and Arezzo and Giudici (2017) These results are consistent with past researches which included similar socio-demographic variables (Maluccio et al., 1999;Robison et al., 2011;Yamamura, 2012). ...
The main purpose is to check the impact of social capital on households’ objective well-being in the context of a developing country like Pakistan. The primary data is collected from 250 households of eight towns in district Faisalabad, the third-largest most populous city of Pakistan. Ordered probit models are used for analysis. The results show that objective well-being is positively and significantly affected by social capital except for social participation and neighborhood cohesion. For subjective well-being, life satisfaction and well-being are positively and significantly associated with all dimensions of social capital except the perception of trust and safety, and education. In the case of self-perceived health, civic participation, voting behavior, and collecting actions (CVC), reciprocity and social support are insignificant. Our results may help in devising social policies related to improvement in life quality and well-being of people. It gives insight into the role of social capital for the reduction of poverty, ameliorating individuals' health status and the well-being of the people. It is suggested that society's well-being may be achieved with higher social capital. The government may devise strategies to increase social capital for improving the well-being of the targeted society.
... This question and similar questions from other surveys have been utilized to measure overall perceived inequality and to account for distributive justice (Bhuiyan & Szulga, 2017;Kerr, 2014;Murthi & Tiongson, 2009;Schneider & Valet, 2017). Therefore, not only are we more closely measuring the theoretical concept of perceived inequality as an explanation for higher homicide rates, but we are also able to take into account that perfect income equality in a population is not, on average, desired by respondents (as established by previous literature, see Norton & Ariely, 2011;Alesina, Di Tella, & MacCulloch, 2004;Guillaud, 2013;Luttens & Valfort, 2012;Toth & Keller, 2011;Yamamura, 2012). ...
... By combining questions from the ISSP into an index we allow each question to build on the strengths and fill in the weakness of the other variables in the index. Specifically, we utilized questions about income differences being too large (used by Hadler, 2005;Kenworth & McCall, 2008;Kerr, 2014;L€ ubker, 2004, 2007Medgyesi, 2013;Suhrcke, 2011), whether the government is responsible for reducing income differences (used by Guillaud, 2013;Luttens & Valfort, 2012;Toth & Keller, 2011;Yamamura, 2012), and the observation of the actual income distribution within a nation (used by Nieuhaus, 2014, and a similar measure by Norton & Ariely, 2011). ...
Economic inequality is a persistent structural covariate of cross-national homicide rates. The most common criminological explanation is that perceived inequality creates frustration among individuals at the lower end of the income distribution, this frustration generates latent anger, and this anger occasionally results in violence. There are reasons to question the validity of this explanation. First, the theoretical reasoning of this population-level phenomenon is reductionist, relying on individual-level explanation. Second, perceived inequality is poorly operationalized by its most common measure, the Gini index, meaning this hypothesis is never actually directly tested. Third, the Gini index is strongly correlated with inequality’s main competing economic explanation, poverty. To address these limitations we used the World Values Survey and the International Social Survey Programme to obtain national-level measures of perceived inequality that are much more consistent with the proposed theoretical construct and weakly correlated with poverty. Controlling for a range of structural covariates we found no consistent evidence of an association between population-level perceived inequality and homicide rates.
... First, with respect to the neighborhood effect, Blekesaune (2013) suggests that individuals who live in countries with a high rate of economic strain tend to support redistribution. Similarly, Yamamura (2012) considers the rate of active participation in community activities as social capital and emphasizes the positive association between the amount of social capital and support for redistribution. In line with these arguments, an interesting study that verifies the relationship between immigration and attitudes toward redistribution suggests that both objective measures of immigration and subjective reactions to immigration have a considerable effect on attitudes toward redistribution (Kulin et al. 2016). ...
... Household income directly affects support for redistribution, and financial status has indirect effects. Other studies that focus on cognitive reactions also report the effects of self-interest factors (Blekesaune 2013;Kulin et al. 2016;Yamamura 2012). By the same token, I clarify that support for redistribution is also the result of self-interest calculations. ...
Why do individuals support redistribution? Many studies have investigated the factors that influence support for redistribution; however, none have confirmed the role of income satisfaction. The aim of this study is to explore the role of income satisfaction in its support of the mechanism for redistribution. In this study, I suggest relative deprivation theory and the concept of satisfying rationality , as both give income satisfaction a theoretical position. Based on this framework, I argue that income satisfaction could be an indicator of relative deprivation and is understood as the basis of rational action. Specifically, I suggest the mechanism of relative deprivation that a feeling of unfairness weakens income satisfaction, and deterioration in income satisfaction leads individuals to support redistribution. To support this argument, I conduct multilevel path analysis using World Value Survey 6 waves focusing on the OECD countries. I first examine the direct effect of income satisfaction on support for redistribution and find a statistical association between income satisfaction and support for redistribution. Then, I check the relationship between income satisfaction and feeling of unfairness to validate income satisfaction as an indicator of relative deprivation. These findings imply that scholars need to pay more attention to the substantial role of individuals’ subjective reaction to the objective economic conditions.
... It has been argued that social values are the key factor in considering redistributive policy (Klor & Shayo, 2010;Luttmer, 2001). In this regard, numerous existing studies examine the formation of preferences regarding redistribution (Alesina & Angeletos, 2005;Alesina & Giuliano, 2009;Alesina & La Ferrara, 2005;Corneo & Grüner, 2002;Dahlberg, Edmark, & Lundqvist, 2012;Ravallion & Lokshin, 2000;Yamamura, 2012Yamamura, , 2014Yamamura, , 2016).Meagher and Wilson (2008)compared perceived income differences and preferences regarding redistribution using basic statistics. Perceptions and views of society are affected not only by the current situation, but also by distant historical events. ...
... DEBHOM, NOHOM, DEBSTOC, and NOSTOC are predated to have positive signs. Previous studies controlled for individuals' demographic and other characteristics (Alesina & Giuliano, 2009;Alesina & La Ferrara, 2005;Corneo & Grüner, 2002;Rainer & Siedler, 2008;Ravallion & Lokshin, 2000;Yamamura, 2012Yamamura, , 2014Yamamura, , 2016). Thus, this paper incorporates CATHO, PROTEST, AGE, MALE, MARRI, and DIVO as independent variables. ...
This paper investigated the extent to which educational levels in the nineteenth century have shaped present-day norms, which influence the perceptions of present-day individuals, such as individuals’ perceived inequality, preference for redistribution, and progressive taxation. Cross-country, individual-level data were used to examine historical educational level and present-day perceptions of social and political issues. After controlling for various country-level and individual characteristics, the major findings were as follows: people in countries with higher educational levels in 1870 are less likely to support redistribution policies and progressive taxation. Moreover, people in countries with higher educational levels in 1870 are more likely to consider income inequality to be smaller.
... The size of the consumer's income, the staple food is one of the products that must be consumed every day. According to Yamamura [25], income influences preferences. Households with high incomes will have a wider preference for carbohydrate sources compared to low-income households. ...
The analog rice produced by UMM is made as a functional food by prioritizing good nutrition to make consumers healthy who consume it. The research objective is to analyze the characteristics of UMM analog rice consumers and the factors that influence consumer preferences for UMM analog rice in Malang. The research used a qualitative and quantitative approach by surveying 50 panelists in Malang City. Data were analyzed descriptively and factor analysis using SPSS. Consumer preferences of UMM Analog Rice are influenced by eight factors, namely product characteristics and health benefits, consumer income and personal factors, product preferences and roles, health perception and value factors, historical and promotional factors, price and marketing influence factors, marketing location factors, and product advantage factor. Product characteristics and health benefits are the factors that most influence consumer preferences for UMM Analog Rice in Malang. Product characteristics are the values contained in a product that describe the product. Originality/Value – UMM analog rice was introduced for diabetes mellitus sufferers. This study brings awareness to the importance of consuming nutritious and safe products for health.
... Although uncertainty and mobility are not the same, it can reduce the aversion towards inequality by emphasizing the informational content of income distribution. Yamamura (2012) examines the externality from neighbouring people on preferences for income redistribution policies. The paper is based on two hypotheses. ...
With the recent advancement in Economics, the idea of rationality has been redesigned to analyse the human behaviour when it comes to decision making. At present, it is also trying to understand various aspects such as envy and happiness. Although both of them are subjective, the economists have mostly focused on the latter. The latter is considered as a measure of welfare by the utilitarianists, while the former had been responsible for the emergence of social and political revolutions. The present essay, after providing a brief account on the theory of tunnel effect given by Hirschman and Rothschild, emphasizes the relevance of studying 'envy' in the context of economic inequality. Secondly, it tries to bring up a discussion on the literature of happiness, life satisfaction and its implications, and tries to analyse the intersections between envy and happiness. Lastly, it has concluding remarks and scope for further studies in this area.
... This leads high-income people to prefer income redistribution from rich to poor people (Yamamura, 2016). Particularly, high-income earners residing in areas with larger social capital are more likely to prefer redistribution (Yamamura, 2012). They have been motivated to avoid reducing social capital and SWB. ...
A tailor-made internet survey experiment provides individuals with information on their income positions to examine their effects on subjective well-being. In the first survey, respondents were asked about their household income and subjective well-being. Based on the data collected, three different respondents' income positions within the residential locality, within a group of the same educational background, and cohort were obtained. In the follow-up survey for the treatment group, respondents are informed of their income positions and then asked for subjective well-being. Key findings are that, after obtaining information, a higher individual's income position improves their subjective well-being. The effects varied according to individual characteristics and proxies.
... In an earlier study, Lederman et al. (2002) find results consistent with these two studies while investigating violent crimes. Furthermore, people in the upper echelon of the society in high SC regions are more sympathetic to wealth redistribution and the greater good (Yamamura, 2012;Daniele and Geys, 2015). ...
Under certain conditions, the recovery theorem is postulated to decompose the state price into its components, the risk aversion and the real-world probability distribution. We present a framework for the evaluation of the recovery theorem under a general equilibrium option pricing approach in a simulated environment. Prior empirical studies that investigate the validity of the recovery theorem relied on statistical tests of whether future realized returns are indeed drawn from the recovered distribution. However, given that the expectations of future returns do not necessarily have to coincide with realized returns, our proposed approach is more appropriate. Issues related to the practical
implementation of the theorem are also discussed and an empirical implementation strategy that produces more stable results is proposed.
... This implies that altruistic grandparents are motivated to redistribute wealth to the future generation because the probability that granddaughters may earn more than grandsons is low. Many empirical studies have explored how and why people prefer income redistribution (e.g., Corneo and Gruüner, 2002;Luttmer and Singhal, 2011;Ravallian and Lokshin, 2000;Yamamura, 2012). Preference for intergenerational redistribution has not been sufficiently explored in empirical analysis thus far. ...
In Japan, the increase in the consumption tax rate, a measure of balanced public finance, reduces the inequality of fiscal burden between the present and future generations. This study estimates the effect of grandchildren on an older person's view of consumption tax, using independently collected data. The results show that having grandchildren is positively associated with supporting an increase in consumption tax. Further, this association is observed strongly between granddaughters and grandparents. However, the association between grandsons and grandparents depends on the sub-sample. This implies that people of the old generation are likely to accept the tax burden to reduce the burden on their grandchildren, especially granddaughters. In other words, grandparents show intergenerational altruism.
... For instance, using Japanese dataYamamura (2012) finds that greater social interaction leads to preferences for more redistribution, especially in the upper end of the income distribution.Roth and Wohlfart (2018) instead look at individual level survey data from a variety of countries and find that, even controlling for social capital and a variety of individual level characteristics, people who had experienced 7 This result is in contrast with De Mello and Tiongson (2003), who however focus on "redistributive transfers" to assess whether more unequal societies redistribute more. This difference suggests that transfers per se need not being redistributive and the whole array of redistributive devices available to governments must be considered when trying to assess redistribution.Content courtesy of Springer Nature, terms of use apply. ...
We examine whether and to what extent political institutions explain different performances in income redistribution across countries. After reviewing the available data sources, the measures of income redistribution and the traditional demand side explanations of redistribution, we focus our analysis on supply side factors, like political and economic institutions, rent seeking processes and the resources and instruments available for redistribution. We provide robust empirical evidence on the association between these different factors and the observed degree of redistribution. Our analysis supports the view that—for a given demand of redistribution—political and economic institutions contribute to explain differences across countries in the observed degree of redistribution.
... *, ** and *** indicate statistical significance at the 10%, 5% and 1% levels, respectively. and greater preferences for income redistribution (Yamamura 2012). Table 5 shows the results for the South of Italy, suggesting evident differences from the Centre-North (Table 4). ...
Human capital is a fundamental economic resource in the knowledge economy era, and improvements in education are usually associated with both economic development and the reduction of inequality. In Italy, these relationships are empirically controversial due to structural weaknesses (e.g., low improvements in labour productivity) and a poor capacity to leverage the returns from education. At the same time, the strong North-South dualism in the country suggests that there are inequalities in human capital endowment that may be exacerbated by the different responses of the regions to common problems. We test the effect of labour force human capital in Italy (observed through worker education level) on income inequality in the 2004–2016 period using regional data. The results suggest that the hypothesized mechanism works as expected in the more developed Centre-North, while structural difficulties hamper the reduction of inequality in the South, where, however, social capital plays a positive role in reducing the income inequalities.
... Government quality and perception of corruption are relevant for the opportunity cost of tax payment as well as for taxpayers' support of welfare policies. If there is a high perception of governmental spending inefficiency and officials are suspected of corruption, the preference for redistribution falls [45]. ...
This paper takes a free-market approach to the idea of welfare. That is, the analysis does not reject the role of the welfare state to fight against poverty and inequality but underlines the perils of the welfare mentality's proliferation. Sustainable development requires more individual responsibility and less dependence on the state and its redistribution function. The aim of this paper is twofold. Firstly, it aims at showing that welfare mentality imposes challenges on sustainable development. The second aim is to identify the factors associated with welfare mentality. We use data from several international databases and apply correlation, principal components, and multiple regression analyses on a sample of 28 European countries. The results of our study show that welfare mentality negatively influences sustainable development by being positively correlated with the risk of poverty and the percentage of young people not in employment, education, or training (NEET). At the same time, countries such as Sweden, Denmark, and Luxembourg, widely acknowledged as welfare policy heavens, register low values in terms of preference for redistribution. The main determinants of welfare mentality are found to be a high level of NEET and a low level of economic freedom. This result points to the role of youth inclusion and free-market institutions in diminishing people's welfare expectations and encouraging them to take better control of their own lives to reach prosperity and not depending on state support.
... 1 Although a number of studies utilize measures of inequality and redistribution at the country level and across periods to account for the effect of inequality on preferences for redistribution (e.g. Yamamura 2012, Pittau et al. 2013, Kerr 2014, Olivera 2015, Roth and Wohlfart 2018, we consider that this strategy gives only an approximate perspective about the role of the structure of taxation and benefits in the country on preferences for redistribution. ...
This paper provides evidence that attitudes towards redistribution are associated with the extent of generosity of the redistributive context experienced by the individual, as measured by the likelihood of receiving positive benefit transfers net of fiscal contribution. We estimate reduced form tax-benefit equations with the EU Statistics on Income and Living Conditions (EU-SILC), and match the implied parameters to the respondents of the European Social Survey (ESS) on the basis of their characteristics. The period of analysis is 2008-2016. For identification, we exploit exogenous cross-country and time variation in tax rules and market income to disentangle implications of exposure to tax-benefit rules on preferences for redistribution from the effects of changes in income inequality. We find that exposure to positive net benefits increases demand for redistribution by about 1.2%, the effect being robust across a variety of specifications. The signs of the effects are consistent with those predicted by a simple model where exposure to redistribution affects expectations for consumption, but risk averse individuals discount this effect by the nature of income shocks they are exposed to in the market.
JEL classification: D31, D63, D72, H20
... In addition to direct informal security-improving assistance, more organized community efforts are also affected. Social capital is associated with higher levels of charitable giving or support for redistribution (Brooks 2005;Wiepking and Maas 2009;Yamamura 2012). Charitable organizations seeking to provide assistance can benefit from information, greater interest and participation, and charitable donations. ...
Rising economic insecurity in recent decades has focused attention on the importance of social welfare programs in managing household financial stability. Some governments are more effective than others in managing this outcome, and informal social institutions help explain why. Social capital is expected to shape economic security through multiple mechanisms, but whether the effect is to magnify or mitigate volatility is an open question. Part of the answer has to do with how social capital interacts with policy implementation, and whether it conditions the effectiveness of government spending. Evidence from the U.S. states from 1986 to 2010 fails to support a benevolent social capital thesis—not only is social capital associated with greater economic insecurity, there is no evidence that it improves social welfare effectiveness. However, greater spending on some social programs can mitigate the adverse impact of social capital on economic security.
... Similarly, Blekesaune's (2013) findings showed the likelihood that individuals would tend to be influenced by their neighborhood environment. More directly, Yamamura (2012) showed that frequent participation in community activities enhances the likelihood of favorable attitudes toward redistribution. Consistent with this perspective, some related studies assert that a feeling of solidarity is more important to support for redistribution than calculated self-interest (Paskov and Dewilde 2012). ...
The aim of this article is to examine the effect of social relations on support for redistribution and to explore desirable forms of redistribution based on mutual understanding. Most previous studies have explained support for redistribution as insurance against risk or the pursuit of self-interest. Under the current framework, however, it is difficult to explain the establishment of a sustainable redistributive policy. To overcome this limitation, I focus on the role of social relations that suppress the tendency to pursue self-interest and promote support for redistribution. My findings indicate that social relations moderate the effect of self-interest and directly affect support for redistribution. From this result, I conclude that social relations could facilitate mutual understanding and alleviate the negative side effects of the labor market.
... The GSOEP also contains questions on several factors that have been repeatedly proven to affect preferences for redistribution, i.e., socio-economic characteristics, the willingness to take risks, perceptions of the role of luck and effort for economic success, and cultural heritage (see, e.g., Ravallion and Lokshin 2000;Fong 2001;Acemoglu and Robinson 2005;Alesina and Fuchs-Schuendeln 2007;Rainer and Siedler 2008;Yamamura 2012). ...
We empirically analyze the relationship between income inequality and individual preferences for public redistribution, focusing on intra-household income inequality between spouses. Using data from the German Socio-Economic Panel, we find that both one’s own earned income and earned intra-household income inequality are significantly negatively related to preferences for public redistribution. However, as the earned income inequality between partners increases, the poorer partner’s preference for public redistribution declines while the richer partner’s preference for public redistribution increases. The poorer partners’ preferences may, in fact, indicate preferences for intra-household redistribution from the richer to the poorer partner. The richer partners’ preferences may be explained by the fact that, when married, they can realize tax savings and, therefore, have to pay relatively less for public redistribution. Moreover, our results confirm previous findings regarding a partner’s future social mobility prospects upon cohabitation ending, because they show that having a strong outside option, i.e., a high wage potential, is significantly negatively related to redistributive preferences, especially among those with an above-average future wage potential.
... I use survey data from the Swedish National Election Studies (SNES) to estimate the effect of 1 A number of studies focus on social preferences, emphasizing the importance of altruism, inequality aversion, and beliefs about the determinants of poverty (e.g., Fong, 2001;Galasso, 2003;Alesina and Angeletos, 2006). Systematic differences in the support for redistribution have also been attributed to culture, social capital, political institutions, and historical experiences (e.g., Corneo and Grüner, 2002;Alesina and Fuchs-Schündeln, 2007;Eugster et al., 2011;Luttmer and Singhal, 2011;Yamamura, 2012;Kuziemko et al., 2015;Algan et al., 2016). Group identity has also been found to predict attitudes toward redistribution (e.g., Luttmer, 2001;Keely and Tan, 2008;Klor and Shayo, 2010;Fong and Luttmer, 2011;Dahlberg et al., 2012). 2 While Margalit (2013) estimates a lagged dependent variable model, I use a first-difference specification, to account for unobserved heterogeneity. ...
Economic circumstances have been argued to be a major determining factor of attitudes toward redistribution, but there is little well‐identified evidence at the individual level. The Swedish National Election Studies are constructed as a rotating survey panel, which makes it possible to estimate the causal effect of economic changes. The empirical analysis shows that individuals who lose their jobs become considerably more supportive of redistribution. Yet, attitudes toward redistribution return to their initial level as economic prospects improve, suggesting that the effect is only temporary. While a job loss also changes attitudes toward the political parties, the probability to vote for the left wing is not affected.
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... Prior studies have identified a list of factors associated with preference for redistribution, which include income (Hasenfeld and Rafferty, 1989;Ravallion and Lokshin, 2000;Bernasconi, 2006), risk and insurance (Iversen and Soskice, 2001;Cusack et al., 2006;Rehm, 2009), borrowing constraints (Harms and Zink, 2003), personal life events (Piketty, 1995;Giuliano and Spilimbergo, 2008), culture (Luttmer and Singhal, 2011), national history (Alesina and Glaeser, 2006), indoctrination of Communism ideology (Alesina and Fuchs-Schundeln, 2007), individual left-or right-wing ideological values (Bernasconi, 2006), family structure (Todd, 1985;Esping-Andersen, 1999;Alesina and Giuliano, 2010), perceptions of fairness (Galasso, 2003;Alesina and Angeletos, 2005;Alesina and Glaeser, 2006), prospects of upward mobility (Benabou and Ok, 2001;Ravallion and Lokshin, 2000;Cojocaru, 2014), ethnic identity (Lindqvist and Östling, 2013) or ethno-linguistic fractionalization (Sturm and De Haan, 2015), social capital (Yamamura, 2012), immigration (Mayr, 2007;Senik et al., 2009;Magni-Berton, 2014), and the desire to be in accordance with public values or to obtain high social standing Gruner, 2000, 2002). ...
We provide a concise overview of the literature concerning the factors influencing preferences for redistribution, with particular attention to works that have integrated considerations of gender and/or cohort heterogeneity into their analyses. We then present a series of stylized facts on preferences for redistribution based on data from the European Social Survey for a wide array of European countries over the period spanning from 2002 to 2022. We document that, since 2002, the average preferences for redistribution have increased. While the gender gap has remained substantially unchanged, the generational gap has widened over time. Distinguishing women and men by a set of individual characteristics, instead, there exists a not negligible heterogeneity both ‘between’ and ‘within’ women and men. At the country level, the overall gender gap in preferences for redistribution increases as the country’s per capita income or gender equality increase. Conversely, the gender gap decreases in more income, unequal, and religious countries. Finally, looking at the two exogenous shocks, that is, the 2008 financial and economic crisis and the Covid-19 pandemic, we observe that average individual attitudes towards redistribution react to both events but in a surprisingly opposite way, with a relevant heterogeneity across different sub-groups of women and men.
We provide a concise overview of the literature concerning the factors influencing preferences for redistribution, with particular attention to works that have integrated considerations of gender and/or cohort heterogeneity into their analyses. We then present a series of stylized facts on preferences for redistribution based on data from the European Social Survey for a wide array of European countries over the period spanning from 2002 to 2022. We document that, since 2002, the average preferences for redistribution have increased. While the gender gap has remained substantially unchanged, the generational gap has widened over time. Distinguishing women and men by a set of individual characteristics, instead, there exists a not negligible heterogeneity both between and within women and men. At the country level, the overall gender gap in preferences for redistribution increases as the country's per capita income or gender equality increase. Conversely, the gender gap decreases in more income unequal and religious countries. Finally, looking at the two exogenous shocks, i.e., the 2008 financial and economic crisis and the Covid-19 pandemic, we observe that average individual attitudes towards redistribution react to both events but in a surprisingly opposite way, with a relevant heterogeneity across different subgroups of women and men.
Although previous studies have examined the influence of education on support for redistribution, studies on how this social cleavage of support for redistribution due to education varies depending on several conditions are scarce. To fill this gap, by focusing on the discussions of motivation with self-interest and with the perception of fairness, this study examines the moderation effects of social and institutional trust on the association between education and the demand for redistribution. For the analysis, the present study utilizes pooled data from multiple rounds of the World Values Survey and the European Values Study and two-way fixed-effects models. Through the international comparative analysis, this analysis finds that social trust but not institutional trust dampens the cleavage of support for redistribution due to education. These results suggest that the horizontal aspect of trust may be more influential on preferences for redistribution than the vertical aspect of trust.
This study aims to explore bilateral interactions of social and economic pillars of sustainability in China to reveal if they are synergistic or trade-off. To this end, this research uses the bootstrap method for panel data and an Ordinary Quantile Regression model to estimate the effects of social capital proxies including political identity, family relationship network and trust on economic condition proxy, household income, in different quantiles of Chinese households. This study uses data based on microsurvey data from the China Family Tracking Survey (CFPS) conducted by the China Social Science Research Center of Peking University in 2014, 2016 and 2018. The results show that social capital positively affects economic status implying the synergistic impact of social development on economic pillars of sustainable development. Moreover, further examination reveals that the resulted improvement in economic status is distributed equally among different quantiles of Chinese households. This result implies that the reflective effect of economic development on social pillar is synergistic. Overall, these findings accept the synergistic interactions between social and economic pillars of sustainability which is consistent with the integrated sustainability perspective. These findings suggest that policymakers in both the social and economic sectors to consider the consequences of their own plans and strategies for the other sectors.
Redistribution preference refers to an individual's tendency or priority in dealing with redistribution problems. This study aims to examine the effects of education and religiosity on redistribution preferences. The novelty in this study is an estimation strategy that includes the influence of education and parental education. The data utilized WVS Wave 7 data. The data analysis used probit regression analysis with a sample of 66,468 respondents. The research results show that the higher the education is, the greater possibility of individual to agree with inequality income will be. Individuals who graduated from elementary and junior high schools tend to agree with equal income, while individuals who graduated from high school and college tend to agree with unequal income. The higher the mother's education is, the greater possibility of individuals to agree with equal income will be. The higher the father's education is, the greater possibility of individuals to agree with unequal income will be. Religiosity has a different influence on redistribution preferences. The obedience variable has a positive influence, while the variable of belief in places of worship and frequency of worship tend to have a negative influence.
This paper reports results from a laboratory experiment that investigates the Meltzer–Richard model of equilibrium tax rates in which individuals are either low or high skilled workers and face a real-effort task that includes leisure at the work place. We find that a large proportion of low-skilled workers vote for the lowest tax rate (the one that gives them the lowest payoff), especially when the alternative tax rate is very high. However, this proportion is significantly reduced in treatments in which the subjects are given extra information about how the tax operates in redistributing income. This result suggests that the lack of information about the role of taxes in income redistribution may be an important factor in explaining the counter-intuitive voting behavior of low-income voters over income redistribution. We also find some support that the prospect of upward mobility and the belief in the negative effect of taxes on productivity make low-income voters support low tax rates, especially when the alternative tax rate is very high.
We investigate the role of self-interest and of all social motivation systems - helping nonrelatives, redistribution of common resources, navigating hierarchies, being accepted in our groups - in establishing preferences for helping the needy and in supporting a decrease in income inequality. Guided by the “Moral Foundation Theory”, we have assumed that those preferences would be driven by different motivational systems. We have used data from the sixth wave of the Word Value Survey since it is the only wave with information on the Schwartz social values, which we use to discuss altruistic behaviours. We tested the role of a set of individual variables in shaping those preferences by applying Least Squares Dummy Variable approach to estimate country fixed effects models. Nonlinearities were especially sought with the use of categorical variables, fully exploiting the richness of the dataset. According to our results for 57 countries, motivations behind redistribution for the needy differ from motivations behind redistribution to decrease inequality. The income level and the social class of an individual are more important for shaping preferences for helping the needy, while the education level, an important proxy for mobility expectations, is more relevant for the assessment of income inequality. The very high or very low importance of God in someone's life and the belief that outcomes in life are driven by effort increase preferences for helping the needy. Higher levels of the importance of God and the belief that luck and networks shape outcomes decrease preferences for equality. Concerns about people who are close to us decrease preference for helping the needy, while concerns about distant people are positively correlated with preferences for equality.
This paper introduces a new survey item through which to measure people’s preferences toward income redistribution. Respondents construct their preferred distribution of after-tax income by changing the tax rates of the bottom four income quintiles. Taxes for the top quintile update automatically in order to keep government revenues fixed and take into account behavioral effects on pre-tax income. Data from a large, representative sample of the Dutch population indicates that around 50–60% of the respondents construct distributions that are more equal overall than the status quo, as measured by the Gini coefficient. Indeed, only 5% of respondents opt for greater inequality, but not beyond a flat-tax. Income ratios for the bottom and top half of the distribution indicate greater support for additional redistribution among those on higher rather than lower incomes. The validity of the responses to the new item is supported by their predictive power for voting behavior in the parliamentary elections almost three years later, even when controlling for a Likert scale. Two information provision experiments illustrate the richness of the new data.
This paper studies the relationship between people’s beliefs about the quality of their institutions, as measured by corruption perceptions, and preferences for redistribution in Latin America. Our empirical study is guided by a theoretical model which introduces taxes into Foellmi and Oechslin’s (2007) general equilibrium model of non-collusive corruption. In this model perceived corruption influences people’s preferences for redistribution through two channels. On the one hand it undermines trust in government, which reduces people’s support for redistribution. On the other hand, more corruption decreases own wealth relative to average wealth of below-average-wealth individuals leading to a higher demand for redistribution. Thus, the effect of perceived corruption on redistribution cannot be signed a priori. Our novel empirical findings for Latin America suggest that perceiving corruption in the public sector increases people’s support for redistribution. Although the wealth channel dominates in the data, we also find evidence for the trust channel —from corruption to demand for redistribution via reduced trust.
This paper studies the individual-level determinants of preference for government redistribution in Japan using the Japanese General Social Survey dataset. I argue that country-specific characteristics might create differences in redistribution preferences and find that contrary to the findings in the literature that focus on western countries, being female decreases the demand for redistribution in Japan. Similarly, being affiliated with a religion increases the demand for redistribution instead of decreasing it. Other determinants of redistribution preferences such as income, education and political preferences have a similar effect in Japan compared with western countries. I also test the effect of happiness on redistribution preferences and find that happiness decreases the demand for redistribution.
This study analyzes the altruistic and selfish motivations that underlie the payment made toward Japan’s Hometown Tax Donation system by the citizens, whereby they can pay the tax to municipalities other than the ones in which they reside and receive reciprocal gifts. Using the local government level panel data for 2008–2015, we find that the Great East Japan Earthquake led to an increase in payments through the system to municipalities in which disaster victims lived, thus reflecting an altruistic motive among the citizens. However, a 1% increase in expenditure toward gifts for donors led to only a 0.61% increase in payments, thus suggesting a selfish motive. Gifting thus dramatically reduces altruistic payments.
This paper examines the effect of local political decision-making institutions (i.e., citizens assembly vs. representative democracy) on citizens’ preferences toward public spending. Exogenous variation in institutions comes from a regression discontinuity design, which exploits a discrete change in the probability that a municipality has representative democracy based on a legally stipulated population threshold in the Swiss canton (state) of Vaud. Policies preferences by municipality are measured by vote shares on Swiss national referendums and initiatives that, if approved, would have increased public spending. Relative to direct democracy, representative democracy reduces vote shares in favor of spending by around 5 percentage points. The effect is unlikely due to sorting on other observables or to feedback from changes in local policies. These findings demonstrate the importance of preferences as a channel through which political decision-making institutions can affect public policies.
We investigate if macro-level social capital, which captures the notions of trust and honesty, has any effects on corporate payout policy. We find that firms situated in U.S. states (or counties) with higher levels of social capital (SC) have higher dividend payouts (DP). These results survive a battery of robustness tests dealing with inference and various forms of endogeneity. We find that the positive SC-DP association is more prominent when monitoring is weak. We also find that the positive SC-DP association remains when we account for internal social capital, political corruption, federal and state income taxes, and other possible dividend clienteles such as in-state pension funds and pension-age populations. Our study contributes to the literatures that regional locations and social considerations constitute clienteles who affect important corporate strategic decisions such as corporate payouts.
Political coordination and policy outcomes may be the result not only of the position of the ‘median voter’ in a political scale but also of the heterogeneity of preferences around the median. Depending on the level of government and the type of policy, such heterogeneity may lead to lower public spending and redistribution. We assess this issue empirically by analyzing the relationship between the distribution of preferences for redistribution and the amount of public expenditure at different levels of government and for several types of spending in 23 European countries. Our results suggest a negative and significant correlation between heterogeneity of preferences for redistribution and public spending that is stronger at the local level and for redistributive functions, independent of the median individual's preferences.
We find that social capital, as captured by secular norms and social networks surrounding corporate headquarters, is negatively associated with levels of CEO compensation. This relation holds in a range of robustness tests including those that address omitted variable bias and reverse causality. Additionally, social capital reduces the likelihood that firms make opportunistic option grant awards that unduly favor CEOs, including lucky awards, backdated awards, and unscheduled awards. Social capital also lessens the accretive effect of CEO power on CEO compensation. These findings indicate that social capital mitigates agency problems by restraining managerial rent extraction in CEO compensation.
Fiziksel sermaye, beşeri sermayeye ilave olarak sosyal sermaye de gelir düzeyinin en önemli belirleyicileri arasında yer almaktadır ve güven ilişkileri sosyal sermayenin en önemli bileşenidir. Bu bağlamda bu çalışmada 2011 Dünya Değerler Anketi sonuçları kullanılarak, Türkiye’de sosyal sermaye ve gelir düzeyi arasındaki ilişki analiz edilmiştir. Çalışmada multinominal lojistik regresyon analizi kullanılmıştır. Modelde yer alan bağımlı değişken hane halkının gelir düzeyi iken, orduya, polise, basına, TBMM’ye, hükümete ve mahkemelere duyulan güven modelin bağımsız değişkenleridir. Kurulan modelde istatistiki olarak anlamlı olan tek değişkeninin orduya güven değişkeni olduğu görülmüştür. Elde edilen sonuçlar bir bütün olarak değerlendirildiğinde Türkiye’de sosyal sermayenin gelir düzeyi üzerinde etkili olmadığı söylenebilir.
Thailand has become an ageing society, and currently there are continuing policy debates regarding the pension system. This paper investigates the determinants of preferences over an intergenerational redistribution policy in Thailand, namely the old-age allowance system. Since 2009 the old-age allowance system has been a non-contributory social pension scheme for all older persons except retired national and local government officials who receive pension monthly and older persons in public residential care facilities. The paper uses nationally representative data collected in 2011 under the project to investigate people’s knowledge of, and attitudes towards, the elderly. Employing logistic regression analysis, the paper looks into the factors correlated with: (1) whether an individual prefers the old-age allowance system to be universal or targeted, and (2) whether an individual is willing to pay more tax so that the elderly can receive more monthly allowance. The paper further divides the individuals into four groups based on the above two types of preferences, and uses multinomial logistic regression analysis to analyze the factors correlated with the likelihood of being in each group. The findings suggest that education, income, expectations regarding one’s own need for the old-age allowance in the future, together with knowledge, understanding, and attitudes towards older persons are key determinants of individuals’ preferences regarding the old-age allowance system.
Few tasks are more important in a post-communist setting than rebuilding the welfare state. We study individual preferences for increasing social welfare spending to reduce inequality. Using two surveys of about 34,000 and 37,000 Russians, we show the great importance of the “bridging” type of social capital for redistribution preferences in Russia, as it precludes possibilities of cheating and free-riding on the welfare state. Instrumenting social capital with education, climate, and distance from Moscow, we deal with endogeneity concerns and also contribute to our understanding of the deep roots of social capital in Russia. We claim that social capital in post-socialist countries could help mobilize public support for redistribution even where institutions are weak.
For a panel of OECD economies (1980-2013) we analyse the scope of government ideology to shape patterns of public expenditures. To address if public expenditures are used to channel redistributive outcomes, we adopt a flexible panel error correction model and proceed in two steps: Firstly, we analyse if ideological positions matter for the sizing of the public sector. Secondly, we address the actual impact of government ideology on two disjoint categories of public expenditure that are characterized by distinguished redistributive effects. Under both, left-wing and right-wing governments, public spending shows progressively redistributive effects which are indirectly channelled through their policy response to changing macroeconomic, fiscal and demographic fundamentals. While right-wing governments act progressively redistributive under favourable socio-economic conditions, their left-wing counterparts do so under unfavourable conditions. Comparing the two effects in terms of their explanatory content, we find that the latter is stronger than the former.
We model inter-individual differences in preferences for redistribution as a function of (a) self-interest; (b) ideas about the deservingness of income differences due to luck, effort and talent; (c) subjective perceptions of the relative importance of these determinants for explaining the actual income distribution. Individuals base the latter on information obtained from their reference group. We analyse the consequences for redistributive preferences of homophilous reference group formation based on talent. Our model makes it possible to understand and integrate some of the main insights from the empirical literature. We illustrate with GSS data from 1987 how our model may help in structuring empirical work.
Multidimensionality resulting from ethnic fractionalization is more prevalent in emerging democracies compared with advanced democracies. Ethnic fractionalization hampers the formation of public opinion favoring income redistribution from the better-off to the worse-off. This occurs because although resource transfers to the poor within the same ethnic group can be supported, transfers to the poor from other ethnic groups will be resisted. Previous studies indicated that ethnic fractionalization reduces preferences for income equality; however, they included both emerging and advanced democracies in the same samples. This approach raises concerns about a spurious relationship, particularly because emerging democracies, on an average, have higher ethnic fractionalization and weaker preferences for income equality than advanced democracies. This chapter focuses only on emerging democracies to test the impact of ethnic fractionalization upon individual preferences for income equality. The multilevel analysis, applied separately to the last two waves of the World Values Survey, reveals that ethnic fractionalization primarily reduces preferences for income inequality, although the relationship is nonlinear. The fact that this relationship was observed when the lower-income group status was controlled for suggests that in ethnically heterogeneous societies, resistance to resource transfers to out-groups is deeply embedded, thus cutting across class lines. These results lend qualified support to the conventional understanding of ethnic heterogeneity and preferences for income equality.
Corruption is generally considered to be a curse. It flouts rules of fairness and gives some people advantages that others don’t have. Corruption transfers resources from the mass public to the elites–and generally from the poor to the rich. It acts as an extra tax on citizens, leaving less money for public expenditures. Economic inequality provides a fertile breeding ground for corruption–and, in turn, it leads to further inequalities. Most of the models of corruption focus on the institutional determinants of government dishonesty. However, such accounts are problematic. Corruption is remarkably sticky over time. There is a very powerful correlation between cross-national measures corruption in 1980 and in 2004. In contrast, measures of democracy such as the Freedom House scores are not so strongly correlated over time–and changes in corruption are unrelated to changes in institutional design. On the other hand, inequality and trust–like corruption–are also sticky over time. The connection between inequality and the quality of government is not necessarily so simple: As the former Communist nations of Central and Eastern Europe show, you can have plenty of corruption without economic inequality. The aggregate relationships between
This paper investigates the role of religion in shaping people’s preferences for redistributive policies in an East Asian country, where traditional values mostly stem from the beliefs of Confucianism, Taoism, and Buddhism that influence people’s perceptions about the principles of social justice. Using data from Taiwan Social Change Survey of 2006, the findings from this study provide supportive evidence for the arguments of previous literature and offer some further distinct results. In particular, under the social and cultural context of an East Asian country, the linkages between religious affiliation and frequency of religious attendance and preferences for redistributive policies are different from what have been found in studies of Western Christian societies. Being Protestant leads to a more favorable attitude toward several social insurance and welfare programs in Taiwan, while Buddhists and Taoists tend to be more supportive of a government’s role in providing health care and believers of folk religions are more favorable for the provision of financial help to students from low-income families. By contrast, the frequency of religious attendance displays some negative relationships with preferences for redistributive policies. As an important part of traditional cultures, religion is influential to the cultivation and indoctrination of people’s beliefs about fairness, social justice, and the legitimization of redistributive policies.
This paper develops a new method to uncover the causal effect of trust on economic growth by focusing on the inherited component of trust and its time variation. We show that inherited trust of descendants of US immigrants is significantly influenced by the country of origin and the timing of arrival of their forebears. We thus use the inherited trust of descendants of US immigrants as a time-varying measure of inherited trust in their country of origin. This strategy allows to identify the sizeable causal impact of inherited trust on worldwide growth during the twentieth century by controlling for country fixed effects. (JEL N11, N12, N31, N32, O47, Z13)
Expressive behavior is the self-interested quest for utility through acts and declarations that confirm a person's identity. Expressive voting is an example of expressive behavior. I introduce expressive behavior in the forms of expressive rhetoric and expressive generosity. The questions for society and for public policy are whether expressive behavior affects others, and if so whether beneficially or disadvantageously. In experiments, expressive behavior often benefits others. There are adverse social consequences when, in real-life decisions, expressive behavior results in unwanted public policies of expressive-policy traps. I consider the prospects for avoiding or exiting expressive-policy traps.
This paper attempts to test the hypothesis that utility depends on income relative to a ‘comparison’ or reference level. Using data on 5,000 British workers, it provides two findings. First, workers' reported satisfaction levels are shown to be inversely related to their comparison wage rates. Second, holding income constant, satisfaction levels are shown to be strongly declining in the level of education. More generally, the paper tries to help begin the task of constructing an economics of job satisfaction.
We design an experiment to study the effects of social identity on preferences over redistribution. The experiment highlights the trade-off between social identity concerns and maximization of monetary payoffs. Subjects belonging to two distinct natural groups are randomly assigned gross incomes and vote over alternative redistributive tax regimes, where the regime is chosen by majority rule. We find that a significant subset of the subjects systematically deviate from monetary payoff maximization towards the tax rate that benefits their group when the monetary cost of doing so is not too high. These deviations cannot be explained by efficiency concerns, inequality aversion, reciprocity, social learning or conformity. Finally, we show that behavior in the lab helps explain the relationship between reported income and stated preferences over redistribution observed in survey data.
There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining
situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet,
when they are given the opportunity to punish free riders, stable cooperation is maintained, although punishment is costly
for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if some people care about equity the puzzles can be resolved. It turns
out that the economic environment determines whether the fair types or the selfish types dominate equilibrium behavior.
The report argues that aid volatility is an important source of volatility for the poorest countries. Following a method already applied by the Agence Française de Développement, the report argues that loans to LICs should incorporate a floating grace period, which the country could draw upon when hit by a shock. The definition of a shock should include aid uncertainty, along with others such as commodity shocks and natural disasters. The idea is calibrated to a key IMF policy instrument towards Low-Income Countries, the Poverty-Reducing and Growth Facility (PRGF).
Le rapport montre que l’aide aux pays pauvres contribue à accroître la volatilité de ces pays. Suivant une méthode déjà élaborée par l’Agence Française de Développement, l’article propose d’accorder des crédits aux pays pauvres, qui incorporent un droit de grâce flexible, utilisable par le pays, lorsqu’il est confronté à un choc négatif, quelle qu’en soit la cause : choc d’aide, de prix des matières premières ou catastrophe naturelle. Il montre comment l’instrument utilisé par le FMI à destination des pays pauvres, le PRGF, pourrait être modifié pour ce faire.
This study analyzes the effects of right-wing extremism on the well-being of immigrants based on data from the German Socio-Economic Panel (SOEP) for the years 1984 to 2006 merged with state-level information on election outcomes. The results show that the life satisfaction of immigrants is significantly reduced if right-wing extremism in the native population increases. Moreover ; the life satisfaction of highly educated immigrants is affected more strongly than that of low-skilled immigrants. This supports the view that policies aimed at making immigration more attractive to the high-skilled have to include measures that reduce xenophobic attitudes in the native population. --
This paper investigates whether individuals feel worse off when others around them earn more. In other words, do people care
about relative position, and does “lagging behind the Joneses” diminish well-being? To answer this question, I match individual-level data
containing various indicators of well-being to information about local average earnings. I find that, controlling for an individual's
own income, higher earnings of neighbors are associated with lower levels of self-reported happiness. The data's panel nature
and rich set of measures of well-being and behavior indicate that this association is not driven by selection or by changes
in the way people define happiness. There is suggestive evidence that the negative effect of increases in neighbors' earnings
on own well-being is most likely caused by interpersonal preferences, that is, people having utility functions that depend
on relative consumption in addition to absolute consumption.
The cross-country correlation between social trust and income equality is well documented, but few studies examine the direction of causality. Reviewing the literature and using a prisoner's dilemma that allows payoff inequality, we show that under plausible circumstances, trust aids the creation of welfare states, which reduces inequality. Trust may also directly affect the income distribution. Using a structural equations model estimated with data for 104 countries, we confirm three hypotheses: 1) Trust has a direct positive effect on gross and net income equality; 2) Larger welfare states lead to higher net equality; and 3) Neither net income equality nor welfare state size causally affect trust, but gross inequality negatively affects trust. We conclude that while welfare states reduce net inequality, this will not increase trust.
This paper attempts to explain how, in Southeast Asia, the strong patron-client bonds which joined peasants to local elites tended to break down during the colonial period—particularly in directly-ruled low-land areas. By examining the effects of social differentiation, the commercialization of subsistence agriculture, and the growth of colonial administration on day-to-day class relations in the countryside, it is possible to show how a relationship the peasant once viewed as collaborative and legitimate came increasingly to be seen as one of simple, if unequal, bargaining or of outright exploitation.
Patron-client relationships are seen as a pattern of exchange of goods and services in which the balance of exchange is related to the legitimacy of the relationship. In particular, physical security and subsistence insurance are minimal services the peasant anticipates in exchange for his deference. In the pre-colonial period the greater availability of alternative social mechanisms such as the kindred and village, the existence of unclaimed land, and the absence of strong outside backing of local powerholders served to provide minimal guarantees for clients, with the social and demographic impact of colonialism strengthened, the bargaining power of elites and moved the balances of reciprocity to their advantage the protective power and coverage of deference relations eroded. The result was a loss of legitimacy by agrarian elites.
Abstract We present simple one-shot distribution experiments comparing the relative importance of e¢ciency, maximin preferences and inequal- ity aversion, as well as the performance of the two competing fair- ness theories by Bolton and Ockenfels (2000) and Fehr and Schmidt (1999). Several of our experiments induce opposing predictions made by both theories. We …nd a clear in‡uence of e¢ciency and max- imin preferences and overall a better performance of the model by Fehr and Schmidt, which, is, however also very poor in face of Pareto- dominance. We thank Gary Bolton, Martin Dufwenberg, Ernst Fehr, Simon Gächter, Wieland Müller, Hans Normann, Axel Ockenfels, Frank Riedel, Klaus Schmidt, an anonymous referee, and the editor as well as participants of the ESA 2000 annual meeting in New York, the First World Congress of the Game Theory Society in Bilbao and the 8th World Congress of the Econometric Society in Seattle for helpful comments. Financial support by the Deutsche Forschungsgemeinschaft through Sonderforschungsbereich 373 and by the DGZ-DekaBank is gratefully acknowledged.
We examine the link between the welfare state and citizens' life satisfaction by using evidence from public health care services. By combining local level data on public health care, and individual level data on life satisfaction, we show that relatively high expenditures in health care have a positive effect on individuals' life satisfaction in our data. We find some evidence for an "ends-against-the-middle" equilibrium (Epple and Romano, 1996) in the provision of public health care, where middle-income individuals prefer higher public expenditure than low-income or high-income individuals. Further, our results indicate that valuation for health care depends on individual political orientation. participants of the Spring Meeting of Young Economists 2007, PEARLE 2007 Seminar, and seminars at the Tinbergen Institute, Labour Institute for Economic Re-search and HECER for helpful comments and discussions. All remaining errors are ours. Kotakorpi gratefully acknowledges financial support from the FDPE, Yrjö Jahnsson Foundation and the Foun-dation for Economic Education. Laamanen gratefully acknowledges financial support from the FDPE and the Yrjö Jahnsson Foundation and thanks the Tinbergen Institute Amsterdam for hospitality during his stay in 2006-2007. Address: Department of Economics and Accounting, FI-33014 University of Tampere, Finland.
'Conspicuous consumption of valuable goods is a means of reputability to the gentleman of leisure.' In The Theory of the Leisure Class Thorstein Veblen sets out 'to discuss the place and value of the leisure class as an economic factor in modern life'. In so doing he produced a landmark study of affluent American society that exposes, with brilliant ruthlessness, the habits of production and waste that link invidious business tactics and barbaric social behaviour. Veblen's analysis of the evolutionary process sees greed as the overriding motive in the modern economy; with an impartial gaze he examines the human cost paid when social institutions exploit the consumption of unessential goods for the sake of personal profit. Fashion, beauty, animals, sports, the home, the clergy, scholars - all are assessed for their true usefulness and found wanting. The targets of Veblen's coruscating satire are as evident today as they were a century ago, and his book still has the power to shock and enlighten. Veblen's uncompromising arguments and the influential literary force of his writing are assessed in Martha Banta's Introduction.
The use of interdependent preferences provides an intuitive link between institutions and growth. Envious agents that care about relative wealth choose to use an available destruction technology to inflict harm on the wealth of other agents when institutions fail to make property rights secure, while they use a production technology to increase their wealth when institutions make it easy and hassle-free to engage in production. The use of interdependent preferences is justified by an extensive literature and can provide a motive for agents to take actions that block growth in the absence of theft or other concrete gains.
Self-regulation is the private provision of public goods and private redistribution. This paper examines the scope of self-regulation motivated by altruistic moral preferences that are reciprocal and stronger the closer are citizens in a socioeconomic distance. The focus is on the role of organizations in increasing self-regulation by mitigating free-rider problems. Social label and certification organizations can expand the scope of self-regulation but not beyond that with unconditional altruism. Enforcement organizations expand the scope of self-regulation farther, and for-profit enforcement is more aggressive than nonprofit enforcement. Enforcement through social pressure imposed by NGOs also expands the scope of self-regulation. (JEL D64, H41, L51)
Is culture an important determinant of preferences for redistribution? To separate culture from the economic and institutional environment ("context"), we relate immigrants' redistributive preferences to the average preference in their birth countries. We find a strong positive relationship that is robust to rich controls for economic factors and cannot easily be explained by selective migration. This effect is as large as that of own household income and appears stronger for those less assimilated into the destination country. Immigrants from high-preference countries are more likely to vote for more pro-redistribution parties. The effect of culture persists strongly into the second generation. (JEL H23, Z13)
Using Japanese prefecture-level panel data, this paper examines how the crime rate is affected by formal and informal deterrents as reflected by police and social capital, respectively. Both, however, suffer from the endogeneity problem and therefore the estimation results are biased when regression analysis is conducted. Hence, the fixed effects 2SLS method is employed to control for the endogeneity bias as well as for unobservable fixed effects. As well, the relationship between inequality and crime is examined. The main findings are: (1) police and social capital reduce the crime rate and their effects increase when the endogeneity bias is controlled for through fixed effects 2SLS estimation. (2) The effects of social capital, which is smaller than that of police, is however is reinforced by police through the complementary relationship existing between them.
We study the effect of the level of inequality in society on individual well-being using a total of 123,668 answers to a survey question about “happiness”. We find that individuals have a lower tendency to report themselves happy when inequality is high, even after controlling for individual income, a large set of personal characteristics, and year and country (or, in the case of the US, state) dummies. The effect, however, is more precisely defined statistically in Europe than in the US. In addition, we find striking differences across groups. In Europe, the poor and those on the left of the political spectrum are unhappy about inequality; whereas in the US the happiness of the poor and of those on the left is uncorrelated with inequality. Interestingly, in the US, the rich are bothered by inequality. Comparing across continents, we find that left-wingers in Europe are more hurt by inequality than left-wingers in the US. And the poor in Europe are more concerned with inequality than the poor in America, an effect that is large in terms of size but is only significant at the 10% level. We argue that these findings are consistent with the perception (not necessarily the reality) that Americans have been living in a mobile society, where individual effort can move people up and down the income ladder, while Europeans believe that they live in less mobile societies.
Recent work suggests that a person’s subjective well-being (SWB) depends to a large degree on relative-income. Focusing on the underlying identification, this paper makes four contributions to this literature: it describes the aggregation problem with past studies, implements an estimation strategy to overcome this problem, finds micro-level evidence in support of the hypothesis that relative-income does matter in individual assessments of SWB, and uses cross-section estimates to replicate the aggregate time-series. The evidence further indicates that relative-income effects may be smaller at low income levels. The results are obtained from ordered probit techniques and the general social survey (GSS).
Is social capital a substitute or a complement to formal institutions for achieving economic growth? A number of recent micro studies suggest that interpersonal trust has its greatest impact on economic performance when court institutions are relatively weak. The conventional wisdom from most macro studies, however, is that social capital is unconditionally good for growth. On the basis of the micro evidence, we outline an investment game between a producer and a lender in an incomplete-contracts setting. A key insight is that social capital will have the greatest effect on the total surplus from the game at lower levels of institutional strength and that the effect of social capital vanishes when institutions are very strong. When we bring this prediction to an empirical cross-country growth regression, it is shown that the marginal effect of social capital (in the form of interpersonal trust) decreases with institutional strength. Our results imply that a one standard deviation rise in social capital in weakly institutionalized Nigeria should increase economic growth by 1.8 percentage points, whereas the same increase in social capital only increases growth by 0.3 percentage points in strongly institutionalized Canada.
This paper investigates the determinants of group membership, and in particular the effect of income inequality on individual incentives to join economic groups. Drawing on a simple model, we show that an increase in inequality has an ambiguous effect and that the type of access rule (open versus restricted access) is key in determining what income categories are represented in the group. Furthermore, the shape of the income distribution can be crucial to determine whether increased inequality leads to more or less group participation. Using survey data from rural Tanzania we find that inequality at the village level has a negative impact on the likelihood that the respondents are members of any group. This effect is particularly significant for relatively wealthier people, both when relative wealth is ‘objectively’ measured, and when it is ‘subjectively’ defined. However, when we disaggregate groups by type of access rule, we find that inequality decreases participation in open access groups when there are wide disparities at the bottom of the distribution, while it increases participation in restricted access groups when the disparities are around the middle and top part of the distribution. Finally, we assess the impact of inequality on various dimensions of group functioning.
Using probabilistic expectations data from the German Socio-Economic Panel, we establish a link between self-reported expectations of occupational mobility and preferences for redistribution. Our results provide new evidence on the validity of the “prospect of upward mobility” hypothesis.
The median-voter hypothesis has been central to an extensive literature on consequences of income redistribution. For example, it has been proposed that greater inequality is associated with lower growth, because of the greater redistribution that is sought by the median voter when income distribution is less equal. There have however been no proper tests of the median-voter hypothesis concerning redistribution, because of previous absence of data on factor-income distribution (that is, incomes before taxes and transfers) across households, and thus on the gains by poorer households from redistribution. The study reported in this paper is based on the required data, with 79 observations drawn from household budget surveys from 24 democracies. The results strongly support the conclusion that countries with greater inequality of factor income redistribute more to the poor. This is so even when we control for the share of the elderly in the population and for pension transfers. The evidence that the median-voter hypothesis adequately describes the collective-choice mechanism is however considerably weaker. Although middle-income groups gain more/or lose less through redistribution in countries where initial (factor) income distribution is more unequal, this regularity is all but lost when, by excluding pensions, we look only at explicit redistributive social transfers from which middle classes contemporaneously gain little. This leaves us searching for an alternative explanation: do middle-classes gain from transfers in the long run even if not contemporaneously?; or is the median-voter hypothesis, based on direct democracy, a proper representation of the mechanisms of collective decision making in representative democracy?
The paper provides measures of inequality in individual well-being by using a normative multidimensional approach. A distinctive contribution of the study is to consider heterogeneous inequality aversion parameters, estimated on the basis of country-specific tax structures. The empirical analysis is carried out for 26 European countries and focuses on three crucial dimensions of individual well-being: income, health and education. Results highlight how this approach provides a flexible and transparent analytical tool which allows explicitly accounting for social preferences about inequality tolerability and well-being dimensions in the design and assessment of redistributive policies.
Support for governmental redistribution tended to be greater for the poor than the rich in a representative sample of Russian adults in 1996. However, support for redistribution is higher amongst those who expect their welfare to fall, and this effect is strongest amongst the currently well-off. A rising trajectory inhibits demand for redistribution. Support is also stronger in rural areas, amongst those with less schooling, those who fear losing their job, the elderly, and amongst women. Our results are consistent with Albert Hirschman’s idea of a ‘tunnel effect’, whereby prospects of mobility (in both directions) influence demand for governmental redistribution.
Does individual well-being depend on the absolute level of income and consumption or is it relative to one’s aspirations? In a direct empirical test, it is found that higher income aspirations reduce people’s utility, ceteris paribus. Individual data on reported satisfaction with life are used as a proxy measure for utility, and income evaluation measures are applied as proxies for people’s aspiration levels. Consistent with processes of adaptation and social comparison, income aspirations increase with people’s income as well as with the average income in the community they live in.
The introduction of (inequity adverse) fair agents in a simple redistributive voting game reduces the political relevance of the middle class and increases the equilibrium level of redistribution. Interestingly, some of the predictions in Meltzer and Richard [J. Polit. Econ. 89 (1981) 914–927] are affected: a rise in the income inequality between poor and middle class may not decrease redistribution, because of the additional support for redistribution provided by the fair agents.
We present new evidence on the influence of income inequality on generalized trust. Using individual panel data from Swedish counties together with an instrumental variable strategy, we find that differences in disposable income, and especially differences among people in the bottom half of the income distribution, are associated with lower trust. The relationship between income inequality and trust is particularly strong for people with a strong aversion against income differentials. We also find that the proportion of people born in a foreign country is negatively associated with trust.
What drives people’s support of governmental reduction of income inequality? We employ data from a large international survey in order to evaluate the explanatory power of three competing forces, referred to as the ‘homo oeconomicus effect’, the ‘public values effect’, and the ‘social rivalry effect’. The empirical analysis reveals that at the aggregate level all three effects play a significant role in shaping individual preferences for political redistribution. Attitudes of citizens in formerly socialist countries turn out to differ from those of western citizens in a systematic way.
This paper examines whether Putnam's claim that social capital is a unitary concept has support in cross-country data. The findings suggest that social capital consists of three orthogonal components corresponding to social trust, social norms and associational activity. To demonstrate the importance of separating the elements of social capital, two results from the social capital literature are re-estimated with the components. The results indicate that the trust component alone underlies the effects on governance and life satisfaction.
Video-based media spaces are designed to support casual interaction between intimate collaborators. Yet transmitting video is fraught with privacy concerns. Some researchers suggest that the video stream be filtered to mask out potentially sensitive ...
Three families of social capital concepts are discussed: (fa1) trust, (fa2) ease of cooperation, and (fa3) network. In the language of game theory, social capital is the excess propensity to play cooperative solutions in prisoners' dilemma games. The three families lead to different definitions, and thus to different measurement methods. Some measures are theory-near, while others are easy-to-use proxies. It is shown that all definitions and measures are related. The 'social capital dream' is that all definitions try to catch aspects of the same phenomenon, so that all measures tap the same latent variable. It is discussed whether this dream is likely to come true.
We use General Social Survey data to test our theory's prediction that voluntary giving increases with inequality aversion for high income individuals, and that the opposite is true for low income individuals. We find strong support for our theoretical predictions.
This book provides a comprehensive, coherent, and optimistic overview on development economics, with an emphasis on East Asia. It is a fully revised and updated third edition, building on the strengths of the previous editions and providing up to date analyses of several recent changes and newly emerged problems relevant to the global economy. These include coverage of crises in Latin America; the recovery of East Asia from the 1997-98 financial crisis; the development of the 'Post-Washington Consensus' and the Millennium Development Goals; and the stalemate around the Kyoto Protocol.
If I understand the common view among modern intellectuals, income redistribution is considered to be a rather simple and almost entirely ethical matter. There are, basically, two theories. The first is that those of us who are well-off use the state as a mechanism for making gifts to the poor. This is well represented by James Rodgers and Harold Hochman in their article, ‘Pareto Optimal Redistribution’.1 The second view, which I shall call the ‘Downsian’, is that in a democracy the poor are able to use their votes to obtain transfers from the rest of society (Anthony Downs [2, esp. pp. 198–201]). These two views are sometimes combined into the view that the bulk of the population takes money from the rich and gives it to the poor by use of the democratic process.
This paper explores the consequences of cognitive dissonance, coupled with time-inconsistent preferences, in an intertemporal decision problem with two distinct goals: acting decisively on early information (vision) and adjusting flexibly to late information (flexibility). The decision maker considered here is capable of manipulating information to serve her self-interests, but a tradeoff between distorted beliefs and distorted actions constrains the extent of information manipulation. Building on this tradeoff, the present model provides a unified framework to account for the conformity bias (excessive reliance on precedents) and the confirmatory bias (excessive attachment to initial perceptions).
This essay incorporates a general treatment of social interactions into the modern theory of consumer demand. Section 1 introduces the topic and explores some of the existing perspectives on social interactions and their importance in the basic structure of wants. In Section 2, various characteristics of different persons are assumed to affect the utility functions of some persons, and the behavioral implications are systematically explored. Section 3 develops further implications and applications in the context of analyzing intra-family relations, charitable behavior, merit goods and multi-persons interactions, and envy and hatred. The variety and significance of these applications is persuasive testimony not only to the importance of social interactions, but also to the feasibility of incorporating them into a rigorous analysis.
Interpersonal preferencespreferences that depend on the characteristics of othersare typically hard to infer from observable individual behavior. As an alternative approach, this paper uses survey data to investigate interpersonal preferences. I show that self-reported attitudes toward welfare spending are determined not only by financial self-interest but also by interpersonal preferences. These interpersonal preferences are characterized by a negative exposure effectindividuals decrease their support for welfare as the welfare recipiency rate in their community risesand racial group loyaltyindividuals increase their support for welfare spending as the share of local recipients from their own racial group rises. These findings help to explain why levels of welfare benefits are relatively low in racially heterogeneous states.
This paper investigates whether individuals feel worse off when others around them earn more. In other words, do people care about relative position, and does "lagging behind the Joneses" diminish well-being? To answer this question, I match individual-level data containing various indicators of well-being to information about local average earnings. I find that, controlling for an individual's own income, higher earnings of neighbors are associated with lower levels of self-reported happiness. The data's panel nature and rich set of measures of well-being and behavior indicate that this association is not driven by selection or by changes in the way people define happiness. There is suggestive evidence that the negative effect of increases in neighbors' earnings on own well-being is most likely caused by interpersonal preferences, that is, people having utility functions that depend on relative consumption in addition to absolute consumption. © 2005 MIT Press
This paper studies what determines group formation and the degree of participation when the population is heterogeneous, both
in terms of income and race or ethnicity. We are especially interested in whether and how much the degree of heterogeneity
in communities influences the amount of participation in different types of groups. Using survey data on group membership
and data on U. S. localities, we find that, after controlling for many individual characteristics, participation in social
activities is significantly lower in more unequal and in more racially or ethnically fragmented localities. We also find that
those individuals who express views against racial mixing are less prone to participate in groups the more racially heterogeneous
their community is. These results are consistent with our model of group formation.