Identifying latent interest-groups: An analysis of heterogeneous preferences for income-redistribution

Christian Pfarr, Andreas Schmid and Morten Mørkbak

MPRA Paper from University Library of Munich, Germany

Abstract: The German government is strongly involved in redistributing income. For various reasons such as the capacity to govern and social stability this makes a good un-derstanding of the citizens’ respective preferences and their informal coalitions ex-tremely important. The identification of such interest groups is non-trivial as they may be determined by latent characteristics and preferences for redistribution are difficult to measure. The aim of this study is to identify latent interest-groups in the context of preferences for redistribution adopting an inductive approach. The data for the estimation of the WTP values is generated by a DCE, based on a rep-resentative sample of 1,538 German individuals. To identify the latent interest-groups we investigate to which extent respondents can be divided into groups us-ing Latent Class Models thereby accounting for both observable and unobservable heterogeneity within the society. Based on the econometric analysis we can identi-fy six social interest groups that differ regarding their preferences for redistribu-tion and their composition. Both, their preferences regarding the overall budget for redistribution and their preferences regarding the different recipient groups as well as the socio-demographic determinants for group membership are plausible and match well with the current political situation in Germany.

Keywords: redistribution; interest groups; preferences; choice experiments; latent class models (search for similar items in EconPapers)
JEL-codes: C93 D31 D72 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-cdm, nep-dcm and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:58823

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