VOTING FOR INCOME‐IMMISERIZING REDISTRIBUTION IN THE MELTZER–RICHARD MODEL |
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| Authors: | RICHARD C BARNETT JOYDEEP BHATTACHARYA HELLE BUNZEL |
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| Institution: | 1. Barnett: Clinical Professor, School of Economics, LeBow College of Business, Drexel University, Philadelphia, PA 19104. Phone 215‐895‐6972, E‐mail rcb63@drexel.edu;2. Bhattacharya: Professor, Department of Economics, Iowa State University, Ames, IA 50011‐1070. Phone 515‐294‐5886, E‐mail joydeep@iastate.edu |
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| Abstract: | This paper argues that income received via redistributive transfers, unlike labor income, requires no direct sacrifice of leisure; this makes it attractive to many voters even if it leaves them poorer. This point is made within the classic Meltzer and Richard (1981) model wherein heterogeneous voters evaluate an income‐redistribution program that finances a lump‐sum transfer to all via a distorting income tax. The political‐equilibrium policy under majority rule is the tax most preferred, utility‐wise, by the median voter. Ironically, this voter, and many poorer voters, may support a redistribution policy that leaves them poorer in income terms but with higher utility. (JEL H2, E6, D72) |
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