Social Preferences and Redistribution Under Direct Democracy

Sanjit Dhami and Ali al-Nowaihi ()

No 08/11, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: There is growing evidence on the roles of fairness and social preferences as fundamental human motives, in general, as well as in voting contexts. In contrast, models of political economy are based on selfish-voters who derive utility solely from 'own' payoff. We examine the implications of introducing voters with social preferences, as in Fehr and Schmidt (1999), in a simple general equilibrium model with endogenous labour supply. We demonstrate the existence of a Condorcet winner for voters, with heterogeneous social preferences (including purely selfish preferences), using the single crossing property of voters’ preferences. Relatively small changes in the preference of voters can have relatively large redistributive consequences. We implications for the size of the welfare state; regional integration; and issues of culture, identity and immigration.

Keywords: Direct democracy; redistribution; other-regarding preferences; single-crossing property (search for similar items in EconPapers)
JEL-codes: D64 D72 D78 (search for similar items in EconPapers)
Date: 2008-04
New Economics Papers: this item is included in nep-cdm and nep-pol
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Citations: View citations in EconPapers (2)

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