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DEPFID Working Papers - 2 / 2011 - Abstract

A cross-country experimental comparison of preferences for redistribution

Francesco Farina* and Gianluca Grimalda**

We examine experimentally individual preferences for redistributions in the US, Italy, and Norway. We decompose demand for redistribution due to luck vis-à-vis individual merit, and study how they are affected by individual and social characteristics. Experimental subjects made four different decisions on how much earning redistribution they wanted to implement in their group starting from a given initial distribution of earnings. The first decision measured preferences for inequality under a condition of impersonality. The second and third decisions were made behind a “veil of ignorance”, whereas the fourth decision was taken knowing one’s position in the earnings scale. Ambiguity and risk aversions were measured in an independent set of decisions. Between-country differences are sizable. Norwegian subjects were generally the most redistributive of the three, and the US subjects the least redistributive. Italian subjects seemed more willing to accept inequality differences due to individual merit than others. Conversely, Norwegian subjects demanded high levels of redistribution regardless of how inequality had been generated. Experimental redistribution is significantly higher in Norway than Italy, in spite of the two samples holding comparable views over social mobility. This calls for a re-examination of existing theories that see beliefs on mobility as the main explanation of demand for redistribution.

Keywords: Inequality, redistribution, individual merit, cross-country experiments

JEL Classification: C91, D31, D63, P52

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Acknowledgements: Financial support from CRISS (Inter-University Research Centre on the Welfare State), Siena University, Rome La Sapienza, Bocconi, Milano; the Italian Ministry of Education MIUR programme, Warwick University, NUPI (Norwegian Centre for the Study of International Relations) is gratefully acknowledged. We also warmly thank the directors of the five experimental laboratories that have facilitated our research: Luca Stanca (Bicocca University), Niall O’Higgins (Salerno University), Craig Parks (Washington State University), Mark van Boening (Mississippi University), Erik Kjetill Brekke (Oslo University). We also thank Tim Salmon, Louis Putterman for helpful comments, Francesco Lo Magistro for technical assistance, Ph.D. students of Rome La Sapienza for participating in a pilot experiment.

* DEPFID, University of Siena
**  Jaume I University; IN+, Technical University of Lisbon