Identifying latent interest-groups: An analysis of heterogeneous preferences for income-redistribution

Pfarr, Christian and Schmid, Andreas and Mørkbak, Morten Raun (2014): Identifying latent interest-groups: An analysis of heterogeneous preferences for income-redistribution.

Abstract

The German government is strongly involved in redistributing income. For various reasons such as the capacity to govern and social stability this makes a good un-derstanding of the citizens’ respective preferences and their informal coalitions ex-tremely important. The identification of such interest groups is non-trivial as they may be determined by latent characteristics and preferences for redistribution are difficult to measure. The aim of this study is to identify latent interest-groups in the context of preferences for redistribution adopting an inductive approach. The data for the estimation of the WTP values is generated by a DCE, based on a rep-resentative sample of 1,538 German individuals. To identify the latent interest-groups we investigate to which extent respondents can be divided into groups us-ing Latent Class Models thereby accounting for both observable and unobservable heterogeneity within the society. Based on the econometric analysis we can identi-fy six social interest groups that differ regarding their preferences for redistribu-tion and their composition. Both, their preferences regarding the overall budget for redistribution and their preferences regarding the different recipient groups as well as the socio-demographic determinants for group membership are plausible and match well with the current political situation in Germany.

• Item Type: MPRA Paper
• Language: English
• Keywords: redistribution; interest groups; preferences; choice experiments; latent class models
• Subjects: C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C93 - Field Experiments; D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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