October 2016

IZA DP No. 10259: In Front of and Behind the Veil of Ignorance: An Analysis of Motivations for Redistribution

published in: Social Choice and Welfare 47(4): 791-824.

This paper uses a laboratory experiment to explore individuals' motivations for redistribution. The laboratory results show that as income uncertainty diminishes, participants become more extreme in their preferences for redistribution. The findings suggest that for most people, the motivation for redistribution is financial self-interest – namely as insurance against future bad luck – rather than furthering equity. However, a non-negligible group of participants propose redistribution levels inconsistent with financial self-interest, where this group is primarily made up of those with the least to lose financially from making such a proposal, and the size of this group increases when participants can communicate prior to proposing. Survey data from the National Longitudinal Survey of Youth and General Social Survey show that these experimental findings may help shed light on the way preferences for redistribution evolve with age in the real world.