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Income Redistribution is not about Risk Sharing

Van Huystee, Sander LU (2011) NEKM01 20112
Department of Economics
Abstract
In this thesis we investigate what determines the attitude towards redistribution of the Dutch population. There is wide consensus in the literature that current income alone is a poor predictor of attitudes towards redistribution, but there is no consensus on the best additional predictors. We review several theories covering additional predictors and test these using data from an online panel. The variety of surveys administered to the panel allows us to 1) test multiple hypotheses on the same sample 2) with several proxies. In this way we are able to 1) contrast the explanatory power of the different theories and 2) test the validity of the different proxies. We find the following results, controlling for income and demographic factors:... (More)
In this thesis we investigate what determines the attitude towards redistribution of the Dutch population. There is wide consensus in the literature that current income alone is a poor predictor of attitudes towards redistribution, but there is no consensus on the best additional predictors. We review several theories covering additional predictors and test these using data from an online panel. The variety of surveys administered to the panel allows us to 1) test multiple hypotheses on the same sample 2) with several proxies. In this way we are able to 1) contrast the explanatory power of the different theories and 2) test the validity of the different proxies. We find the following results, controlling for income and demographic factors: a) risk aversion and expectations about the future do not provide satisfactory explanations. Our results on risk aversion contradict with the understanding of the welfare state as a risk sharing device. b) Beliefs about incentive costs of redistribution do have a considerable impact on the attitudes towards redistribution. c) Preferences on equality have a substantial impact. d) Ethnic and nationalistic identities have an impact on attitudes towards redistribution of the native populations, but not of immigrant population. These results do however contradict with the theoretical understanding and might capture social class in a way which was uncontrolled for. (Less)
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author
Van Huystee, Sander LU
supervisor
organization
alternative title
A comparison of arguments concerning the attitude towards redistribution in the Netherlands
course
NEKM01 20112
year
type
H1 - Master's Degree (One Year)
subject
keywords
Social identity, Preference for redistribution, Risk sharing, Fairness
language
English
id
2199001
date added to LUP
2011-11-11 13:40:14
date last changed
2011-11-11 13:40:14
@misc{2199001,
  abstract     = {In this thesis we investigate what determines the attitude towards redistribution of the Dutch population. There is wide consensus in the literature that current income alone is a poor predictor of attitudes towards redistribution, but there is no consensus on the best additional predictors. We review several theories covering additional predictors and test these using data from an online panel. The variety of surveys administered to the panel allows us to 1) test multiple hypotheses on the same sample 2) with several proxies. In this way we are able to 1) contrast the explanatory power of the different theories and 2) test the validity of the different proxies. We find the following results, controlling for income and demographic factors: a) risk aversion and expectations about the future do not provide satisfactory explanations. Our results on risk aversion contradict with the understanding of the welfare state as a risk sharing device. b) Beliefs about incentive costs of redistribution do have a considerable impact on the attitudes towards redistribution. c) Preferences on equality have a substantial impact. d) Ethnic and nationalistic identities have an impact on attitudes towards redistribution of the native populations, but not of immigrant population. These results do however contradict with the theoretical understanding and might capture social class in a way which was uncontrolled for.},
  author       = {Van Huystee, Sander},
  keyword      = {Social identity,Preference for redistribution,Risk sharing,Fairness},
  language     = {eng},
  note         = {Student Paper},
  title        = {Income Redistribution is not about Risk Sharing},
  year         = {2011},
}