A real-effort experiment is conducted in order to detect preferences for one out of three different models of the Welfare State characterized by different tax-and-transfer schemes. We reproduce a small society in the lab where: Subjects are grouped in three stylized classes (the rich, the middle class and the poor) on the basis of their performance in a real-effort activity; income and risk are assigned according to the class; tax revenue is spent to refund unlucky people and to provide a public good. Experimental subjects must choose (both under and without a veil of ignorance concerning their position in the society created in the lab) among (a) a baseline proportional scheme, where the State is neutral with respect to risk heterogeneity; (b) an actuarially fair scheme where low ability and low earnings subjects bear full individual responsibility for risk exposure and (c) a progressive scheme where mutual risk insurance spreads risk across all subjects such that low ability and low earnings individuals are compensated. Our most relevant finding is that preference is motivated less by a justice principle and more by self-interested considerations on the expectations surrounding one’s own position in the society.

Ottone, S., Farina, F., Ponzano, F. (2019). On the collective choice among models of social protection: An experimental study. GAMES, 10(4) [10.3390/g10040041].

On the collective choice among models of social protection: An experimental study

Ottone S.
;
Ponzano F.
2019

Abstract

A real-effort experiment is conducted in order to detect preferences for one out of three different models of the Welfare State characterized by different tax-and-transfer schemes. We reproduce a small society in the lab where: Subjects are grouped in three stylized classes (the rich, the middle class and the poor) on the basis of their performance in a real-effort activity; income and risk are assigned according to the class; tax revenue is spent to refund unlucky people and to provide a public good. Experimental subjects must choose (both under and without a veil of ignorance concerning their position in the society created in the lab) among (a) a baseline proportional scheme, where the State is neutral with respect to risk heterogeneity; (b) an actuarially fair scheme where low ability and low earnings subjects bear full individual responsibility for risk exposure and (c) a progressive scheme where mutual risk insurance spreads risk across all subjects such that low ability and low earnings individuals are compensated. Our most relevant finding is that preference is motivated less by a justice principle and more by self-interested considerations on the expectations surrounding one’s own position in the society.
Articolo in rivista - Articolo scientifico
D31; D63; Income distribution; Public expenditure; Self-interest; Taxation JEL CLASSIFICATION: C9; Welfare state;
English
11-ott-2019
2019
10
4
41
none
Ottone, S., Farina, F., Ponzano, F. (2019). On the collective choice among models of social protection: An experimental study. GAMES, 10(4) [10.3390/g10040041].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/302265
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