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Politically sustainable targeted transfers

Author

Listed:
  • Philippe De Donder

    (University of Québec at Montréal (UQAM))

  • Eugenio Peluso

    (DSE University of Verona)

Abstract

We show that a transfer received by a minority of the population may be sustained by majority voting, however small the minority targeted may be, when the attribution of the transfer is seen as stochastic by voters. We build a simple model wherein voters differ in income and vote over a proportional tax whose proceeds are distributed lump-sum, and each voter has a probability of receiving the transfer that depends on his income. In progressive steps, we present intuitively appealing sufficient conditions on this probability function for the social program to be supported by majority voting. We also develop intuitive conditions for the emergence of the “paradox of redistribution”, whereby more focused targeting reduces the size of the transfer program chosen by the majority. We finally apply our framework to the French social housing program and obtain that our model is consistent with a majority of French voters supporting a positive size for that program.

Suggested Citation

  • Philippe De Donder & Eugenio Peluso, 2018. "Politically sustainable targeted transfers," Public Choice, Springer, vol. 174(3), pages 301-313, March.
    • Handle: RePEc:kap:pubcho:v:174:y:2018:i:3:d:10.1007_s11127-018-0500-1
    DOI: 10.1007/s11127-018-0500-1
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    Cited by:

    1. Cardak, Buly A. & Glomm, Gerhard & Ravikumar, B., 2020. "Majority voting in a model of means testing," European Economic Review, Elsevier, vol. 122(C).
    2. Cremer, Helmuth & Klimaviciute, Justina & Pestieau, Pierre, 2021. "A political economy of loose means-testing in targeted social programs," Economics Letters, Elsevier, vol. 202(C).
    3. David Coady, 2023. "In Search of a Paradox of Redistribution Analysis of Fiscal Redistribution in High-Income Countries," LIS Working papers 871, LIS Cross-National Data Center in Luxembourg.
    4. Justina Klimaviciute & Pierre Pestieau, 2023. "The economics of long‐term care. An overview," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1192-1213, September.

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    More about this item

    Keywords

    Paradox of redistribution; A program for the poor is a poor program; Majority voting; Social housing in France;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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