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Soc. Sci. 2016, 5(3), 33; doi:10.3390/socsci5030033

Who Wants Income Inequality?: An Analysis of Public Choice under Income Comparison

Center for Experimental & Applied Economics, Department of Applied Economics and Statistics, University of Delaware, 213 Townsend Hall, Newark, DE 19716, USA
Academic Editor: Urs Fischbacher
Received: 5 February 2016 / Revised: 15 June 2016 / Accepted: 11 July 2016 / Published: 20 July 2016
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Abstract

This study investigates when individuals from advantaged and disadvantaged groups are in favor of reducing income inequality. Using a model that considers both an individual’s absolute income and relative income, I examine the conditions under which income equalization is supported by some members in the advantaged group and, more interestingly, opposed by part of the disadvantaged group. In equilibrium, the valuation towards relative income, the initial endowment the difference between the two groups and the amount of income transfer upon equalization have opposite effects on different groups’ likelihood of favoring equalization. To this end, I conduct a comparative statics analysis, and the results suggest that in order to incentivize more individuals to support inter-group income transfer, a policymaker’s optimal strategy substantially depends on how much the society values relative income. View Full-Text
Keywords: income inequality; intra-group discrimination; relative income; public choice income inequality; intra-group discrimination; relative income; public choice
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Li, T. Who Wants Income Inequality?: An Analysis of Public Choice under Income Comparison. Soc. Sci. 2016, 5, 33.

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