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Christina Fong: Fairness and demands for redistribution

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Christina Fong: Fairness and demands for redistribution

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Christina Fong: Fairness and demands for redistribution

  1. 1. Fairness and Demands for Redistribution Christina Fong Department of Social and Decision Sciences Carnegie Mellon University
  2. 2. Introduction • Redistributive preferences and behaviors are affected by beliefs about • Justice in general (e.g., opportunity and meritocracy in the economy) • Moral worthiness about specific social categories of recipients and taxpayers. • Overview how these beliefs have been conceptualized in the past. • Introduce newer focus: target-specific beliefs • Highlights from empirical research • Comments on the policy relevance of this research.
  3. 3. Perceived Fairness -> Attitudes to Inequality • Fairness matters. • People are more opposed to inequality and demand more redistribution when they believe that inequality reflects luck or circumstances rather than effort of factors under individual control. • People are more accepting of inequality when they believe it reflects opportunity and meritocracy. • Pecuniary self-interest matters too. Just not as much as economists expected.
  4. 4. Social Preferences, Self-Interest and the Demand for Redistribution (Fong 2001) 0 0.1 0.2 0.3 0.4 0.5 0.6 1 2 3 4 5 6 EstimatedProbabilitiy Support for Redistribution Figure 1. Estimated Probabilities for Four Categories of People Full Sample (N = 2738) Believes in Luck Believes in Effort Low Socio-Econ Status High Socio-Econ Status
  5. 5. Relevant Literatures • The empirical regularity of beliefs in meritocracy being associated with demands for redistribution reflects a common theme across the disciplines: • Accounts of Protestant work ethic going back to Martin Luther (history) • Equity as a principle of justice (sociology, psychology) • Reciprocity, especially “Strong Reciprocity” (anthropology, economics) • Formal models of how beliefs about causes of income mobility and meritocracy affect demands for redistribution (economics)
  6. 6. General Attitudes to Inequality and Beliefs about Merit • Measures of general attitudes to inequality and redistribution • “Inequality is a problem that needs to be fixed.” • “The government should tax the rich to help the poor.” • Measures of general beliefs that incomes are under volitional control • “The United States is a land of opportunity. Anyone who works hard enough can get ahead in life.” • “The economy is a meritocracy.” • “What does it take to get ahead in life?” “Effort, luck or circumstances beyond control, or both?”
  7. 7. Target-Specific Attitudes about Inequality • Attitudinal measures from U.S. Gallup data: • “People feel differently about how far a government should go. Here is a phrase which some people believe in and some don’t. Do you think our government should or should not redistribute wealth by heavy taxes on the rich? • “Some people feel that the government in Washington, DC should make every possible effort to improve the social and economic position of the poor. Others feel that the government should not make any special effort to help the poor, because they should help themselves. How do you feel about this?” • Attitudinal measures from German Socio-Economic Panel (SOEP) • “Taxes on those with high incomes in Germany should be increased.” • “Financial help to those with low incomes in Germany should be increased.”
  8. 8. Data from Experiments • Gifts of real money to real-life poor people in economic experiments. • Experimentally manipulated information about the recipients in dictator games • Charity (worthy) versus anonymous student (Eckel and Grossman) • Race (Fong and Luttmer) • Prior work history (Fong) • Substance abuse (Fong and Oberholzer-Gee)
  9. 9. Who Holds Target-Specific Beliefs? • In 1998 Gallup data, over 40% of respondents do NOT have general beliefs. Similar results in 2014 German SOEP data. • In the U.S., men, fulltime workers, people without college degrees, those in the second-to-bottom income class, and younger people blame the poor more than they credit the rich.
  10. 10. Examples of Target-Specific Demands for Redistribution • Relative to non-union members, union members show stronger support for taxes on the rich than transfers to the poor. • From a fiscal point of view, consistent with support for redistribution to their own class, the middle class. • In contrast, people with college degrees show less support for taxes on the rich and more support for transfers to the poor • From a fiscal point of view, consistent with support for redistribution AWAY from the middle class.
  11. 11. Beliefs about the Poor in America: Qualitative Evidence
  12. 12. Empirical Effects of Target-Specific Beliefs Depvar = GOVPOOR Depvar = TAXRICH WHYPOOR STRONGER (significant) WEAKER WHYRICH WEAKER STRONGER (significant) • Target-specific effects are significantly larger than non-target specific effects both: • (i) Across equations (within rows) • (ii) Within equations (within columns)
  13. 13. Conclusion • Support for redistribution is highly conditional on beliefs about traits of taxpayers and transfer recipients. • Rather than supporting more redistribution overall, there are groups of people who may support some redistributive policies but not others. • Union members more likely to support taxes on the rich they are to support transfers to the poor -> redistribution toward middle class • College educated show less support for taxing the rich and more support for transfers to the poor - > redistribution away from middle class