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The Preferences for Redistribution: Foundations, Representation and Implications for Social Decisions – RediPref

Preferences for redistribution

Foundations, representations and implications for social decisions

Understand the determinants of preferences for redistribution, rigorously define the notion of social improvement and, then, propose criteria for comparing distributions that reflect these judgements.

The growth of social inequalities is a major source of concern for most Western countries. While all citizens agree on this, there are different views on the attitudes that governments should have towards it. How do citizens perceive these inequalities? Should all inequalities be considered unfair? Why do positions on redistribution differ from country to country? How can we define a change in social outcomes (such as income) that is perceived as unambiguously social welfare improving? The aim of this project is to shed new light on these issues. First, it is to identify the different dimensions that impact preferences for redistribution, and how these interact. On this basis, a second objective is to provide social comparison criteria, which accurately reflect these preferences.

The understanding of preferences for redistribution requires first of all a mastery of the main existing contributions in the literature. A scientific watch has therefore been set up throughout the project. The principle is to identify the determinants of preferences that appear to be robust, i.e. confirmed by several studies adopting different approaches. Thus, the understanding of these preferences requires the exploitation of available databases, mainly surveys, made possible by the traditional applied econometrics tools. In order to identify the positions of individuals on the transformations of social outcomes, judged as improving social well-being in theoretical works, the experimental method is required because it allows to fully control the environment in which the individual is led to make choices or judgements. Finally, a large part of the work consisted of proposing theoretical models, aiming to provide criteria for comparing distributions of social outcomes compatible with the identified preferences.

A first contribution of the project is a synthesis article on the determinants of preferences for redistribution, which lays the foundations for a monograph currently being written. This work has also been the subject of two lectures in doctoral schools, one of which was international. Through several articles we have proposed criteria for comparing (in terms of social well-being) distributions of social outcomes, applicable in particular to variables such as education or health. We have applied these criteria to empirical data in these fields, in an international comparison perspective. This work has initiated an ANR PRC project (OrdIneq, 2016-2022) as well as an international project (ChallIneq, 2019-2021) involving three European countries and India.

While some parts of the project have been developed further than originally expected, other aspects have not yet been finalised. One aspect concerns redistribution as a form of social insurance. Irrespective of the individual's current situation, he or she may defend redistribution today only because his or her personal prospects, in the medium or long term, appear unfavourable. Indeed, the demand for redistribution may be positively determined by the individual's risk aversion. A first ambition will be to better understand this possible correlation through new experimental investigations. On this basis, a model of individual preferences could be proposed, considering that individuals base their decisions on the social risks they face. A second dimension, relatively absent in the finalized works, is the consideration of intergenerational transmission. Firstly, the intergenerational transmission of preferences, which seems to be a robust determinant. Secondly, the intergenerational transmission of social capital (through parental education in particular), which seems to be one of the major causes of the increase in inequality of opportunity. These different issues are the subject of ongoing work within the (slightly expanded) RediPref consortium.

This project has resulted in 8 publications in peer-reviewed scientific.journals, plus a few working papers not finalised at the end of the project. First, 4 theoretical articles were published in leading journals in economic theory and/or microeconomics (Journal of Economic Theory, Economic Theory, 2 in Social Choice and Welfare). Then there are 3 empirical articles published in general economic journals (Applied Economics, Scandinavian Journal of Economics, Review of Income and Wealth). Finally, a review article was published in a French generalist journal (Revue Française d'Économie).

The international success of the recent Thomas Piketty’s book (Piketty, 2014, Capital in the Twenty-First Century, Harvard University Press) is a clear indication that inequality is still continuing to be a major preoccupation throughout the World. The long run increase in wealth inequalities documented
by Piketty in developed countries is reinforced by the recent sharp increases in income inequality. Nevertheless, even if we all accept that income inequality has risen, very different views exist on the attitudes the governments should adopt with respect to it. How do individuals perceive inequalities?
Do we have to consider all inequalities as unfair? In parallel to the worsening of the income and wealth inequalities, the last decades have also been characterised by increased social risks. These essentially originate in the profound changes in the labour market structure that go along with a deterioration of the unemployment rates. Hence, even if individuals are concerned with fairness considerations, it is not clear to what extent preferences for redistribution can be associated with such motives. Redistribution can be perceived as social insurance, and thus risk aversion of the individuals may came into
play. The project aims at shedding new light on the preferences for redistribution, by providing a better description of people’s perceptions of inequality and social risks. The benefits for society of the project would be to provide the social planner with implementable social decision rules which reflect
the individual preferences for redistribution, that can be used in public policy making.

Project coordinator

Monsieur Brice Magdalou (Centre d’Economie de l’Environnement Montpellier)

The author of this summary is the project coordinator, who is responsible for the content of this summary. The ANR declines any responsibility as for its contents.

Partner

CEE-M Centre d’Economie de l’Environnement Montpellier

Help of the ANR 144,560 euros
Beginning and duration of the scientific project: September 2015 - 48 Months

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