On the Collective Choice among Models of Social Protection: An Experimental Study

Francesco Farina, Stefania Ottone and Ferruccio Ponzano
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Francesco Farina: DISP, Libera Università Internazionale degli Studi Sociali Guido Carli, 00198 Rome, Italy
Stefania Ottone: DEMS, University of Milan Bicocca, 20126 Milan, Italy
Ferruccio Ponzano: DIGSPES, University of Piemonte Orientale, 15121 Alessandria, Italy

Games, 2019, vol. 10, issue 4, 1-17

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.

Keywords: welfare state; income distribution; self-interest; public expenditure; taxation JEL CLASSIFICATION: C9; D31; D63 (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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