Voting on Redistribution through a "Leaky Bucket". Evidence from a Laboratory Democracy

Zeit: 
15.02.2016 - 12:00 bis 13:30
Ort: 
A 5,6 Raum A 231
Art der Veranstaltung: 
AB B-Kolloquium
Vortragende/r: 
Prof. Dr. Markus Tepe
Zugehörigkeit des Vortragenden: 
Universität Oldenburg
Beschreibung: 

The Meltzer-Richard model is generally considered as the working horse model in the political economy of redistribution. Its prediction that non-egalitarian societies redistribute more, however, receives little empirical support from macro comparative research. This study argues that the inefficiency (“leaky bucket”) of the redistribution regime itself helps to explain why empirical levels of redistribution are lower than the predicted levels. Utilizing a modified version of the Meltzer-Richard Model we designed a laboratory experiment to test how inefficiency affects the individual vote and collective decisions on redistribution. Subjects were matched into anonymous groups of five individuals with a given individual gross income. Each group votes on a proportional tax rate under majority rule. The collective agreed tax rate is implemented and determines the individual pay-off. The treatment variable is the degree of inefficiency attached to the redistribution system. This design enables us to test how inefficiency (leaky bucket) affects the individually and collectively preferred tax rate. Experimental findings can be summarized in two points: First, inefficiency significantly lowers the individually preferred and collectively agreed tax rate. Second, there is no linear relationship between the size of the leak and the reduction in redistribution, implying that a little bit of inefficiency can lead to a lot of less redistribution.