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Open AccessArticle

On the Collective Choice among Models of Social Protection: An Experimental Study

1
DISP, Libera Università Internazionale degli Studi Sociali Guido Carli, 00198 Rome, Italy
2
DEMS, University of Milan Bicocca, 20126 Milan, Italy
3
DIGSPES, University of Piemonte Orientale, 15121 Alessandria, Italy
*
Author to whom correspondence should be addressed.
Games 2019, 10(4), 41; https://doi.org/10.3390/g10040041
Received: 30 July 2019 / Revised: 15 September 2019 / Accepted: 27 September 2019 / Published: 11 October 2019
(This article belongs to the Special Issue Empirical Tax Research and Application)
A real-effort experiment is conducted in order to detect preferences for one out of three different models of the Welfare State characterized by different tax-and-transfer schemes. We reproduce a small society in the lab where: Subjects are grouped in three stylized classes (the rich, the middle class and the poor) on the basis of their performance in a real-effort activity; income and risk are assigned according to the class; tax revenue is spent to refund unlucky people and to provide a public good. Experimental subjects must choose (both under and without a veil of ignorance concerning their position in the society created in the lab) among (a) a baseline proportional scheme, where the State is neutral with respect to risk heterogeneity; (b) an actuarially fair scheme where low ability and low earnings subjects bear full individual responsibility for risk exposure and (c) a progressive scheme where mutual risk insurance spreads risk across all subjects such that low ability and low earnings individuals are compensated. Our most relevant finding is that preference is motivated less by a justice principle and more by self-interested considerations on the expectations surrounding one’s own position in the society. View Full-Text
Keywords: welfare state; income distribution; self-interest; public expenditure; taxation JEL CLASSIFICATION: C9; D31; D63 welfare state; income distribution; self-interest; public expenditure; taxation JEL CLASSIFICATION: C9; D31; D63
MDPI and ACS Style

Farina, F.; Ottone, S.; Ponzano, F. On the Collective Choice among Models of Social Protection: An Experimental Study. Games 2019, 10, 41.

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