Modelling Heterogeneous Preferences for Income Redistributionâ€“An Application of Continuous and Discrete Distributions
Andreas Schmid () and
Morten Raun MÃ¸rkbak
Review of Income and Wealth, 2018, vol. 64, issue 2, 270-294
This paper investigates observable and unobservable heterogeneity in individualsâ€™ preferences for redistributionâ€”differentiating the desired overall volume of redistribution and who should receive benefits, subsidies, or transfers. We use data from a discrete choice experiment (DCE) conducted in the field and based on a representative sample of the German votingâ€ age population. Applying random parameters and latent class models, our results show that latent and potentially discontinuously distributed factors must be accounted for, as they heavily impact the interpretation of the findings. We find considerable heterogeneity in redistribution preferences, clearly identifying three distinct subgroups. While all groups are in favor of redistribution, they differ regarding the preferred allocation of the redistributive budget.
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Persistent link: https://EconPapers.repec.org/RePEc:bla:revinw:v:64:y:2018:i:2:p:270-294
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