Munich Personal RePEc Archive

Does Inequality breed Altruism or Selfishness? Gauging Individuals’ Predispositions Towards Redistributive Schemes

Machado, Fabiana (2011): Does Inequality breed Altruism or Selfishness? Gauging Individuals’ Predispositions Towards Redistributive Schemes.

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Abstract

Economic and political decisions usually involve a trade-off between efficiency and equality considerations. While some inequality is expected to prevail in our soci- eties, high levels of it are objectionable on various grounds. One of the fundamental roles of government is to collect and reallocate resources among its citizens, and iden- tifying the right policies to guide these reallocations is central to promoting higher equality. While we now have a good grasp of which policies lead to more equality and which do not, we know much less about why they seem to be adopted to varying degrees of intensity in some places and times and not in others. To explain this varia- tion in policy outcomes, the most fundamental task is to identify the constituencies for the different policies. Who supports what policies and under what conditions do they support them? In this paper this question is investigated based on public opinion data on preferences over taxation and government spending on conditional-cash-transfers, pension schemes, and education. All policies that were found to significantly affect inequality. We find that disagreement across socio-economic groups arise not so much on whether the government should tackle inequality, but on how it should go about doing it. Poorer respondents tend to support cash transfers to a greater extent than the rich. But the rich tend to be more likely to support expenditures on public provision education than the poor. Contrary to what is commonly assumed, inequality seems to breed altruism among the rich when it comes to the quintessential poverty reduction scheme of conditional-cash-transfers.

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