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Income redistribution and public good provision: an experiment

Agathe Rouaix (), Jonathan Maurice () and Marc Willinger ()
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Agathe Rouaix: LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, UM1 - Université Montpellier 1

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Abstract: We provide a new experimental investigation of the neutrality theorem of Warr (1983), according to which "when a single public good is provided at positive levels by private individuals, its provision is unaffected by a redistribution of income". Our experimental design differs from Chan et al. (1996) in that we redistribute within each group the total group endowment after 10 rounds, instead of comparing different income distributions across groups. We need therefore to control for the "restart effect" (Andreoni, 1988). To do so, we compare our two test-treatments, an unequalizing redistribution (EI) and an equalizing redistribution (IE), to two benchmark treatments for which the same sequence of 10 rounds is repeated twice either with an equal distribution (EE) or with unequal distribution (II). The constituent game has a unique interior dominant strategy equilibrium depending on income. Our data supports the neutrality theorem (after controlling for the restart effect) : redistribution does not affect the total amount of public good in none of the test treatments. However, the analysis of individual behavior shows that "poor" subjects over-contribute with respect to their Nash contribution, will "rich" subjects tend to play their Nash-contribution or under-contribute slightly. Furthermore, after a redistribution, both types of subjects tend to under-react : those who get poor do not reduce their contribution enough, while those who get richer do not increase sufficiently their contribution

Keywords: THEOREME DE WARR; FOURNITURE D'UN BIEN PUBLIC; REDISTRIBUTION (search for similar items in EconPapers)
Date: 2013
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01133977
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Published in International Economic Review, Wiley, 2013, 54 (3), pp.957-975. ⟨10.1111/iere.12024⟩

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Related works:
Journal Article: INCOME REDISTRIBUTION AND PUBLIC GOOD PROVISION: AN EXPERIMENT (2013) Downloads
Working Paper: Income Redistribution and Public Good Provision: An Experiment (2013)
Working Paper: Income Redistribution and Public Good Provision: an Experiment (2011) Downloads
Working Paper: Income Redistribution and Public Good Provision: An Experiment (2009)
Working Paper: Income Redistribution and Public Good Provision: An Experiment (2009)
Working Paper: Income Redistribution and Public Good Provision: An Experiment (2009)
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