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An Experimental Study Of The Poum Hypothesis

In: Inequality, Welfare and Income Distribution: Experimental Approaches

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  • Daniele Checchi
  • Antonio Filippin

Abstract

The “prospect of upward mobility” (POUM) hypothesis formalised by Benabou and Ok (2001a) finds explicit assumptions under which some individuals that are poorer than the average optimally choose to oppose redistribution policies. The underlying intuition is that these individuals rationally expect to be richer than average in the future. This result holds provided the mobility process is concave in expectations, redistribution policies are expected to last for a sufficiently long period and individuals are not too risk averse. This paper tests the POUM hypothesis by means of a within subjects experiment where the concavity of the mobility process, the degree of social mobility, the knowledge of personal income and the degree of inequality are used as treatments. Other determinants of the demand for redistribution, such as risk aversion and inequality aversion are (partially) controlled for via either the experiment design or the information collected during the experiment. We find that the POUM hypothesis holds under alternative specifications, even when we control for individual fixed effects.

Suggested Citation

  • Daniele Checchi & Antonio Filippin, 2004. "An Experimental Study Of The Poum Hypothesis," Research on Economic Inequality, in: Inequality, Welfare and Income Distribution: Experimental Approaches, pages 115-136, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:reinzz:s1049-2585(04)11006-5
    DOI: 10.1016/S1049-2585(04)11006-5
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    1. Roland Benabou & Efe A. Ok, 2000. "Mobility as Progressivity: Ranking Income Processes According to Equality of Opportunity," Working Papers 150, Princeton University, School of Public and International Affairs, Discussion Papers in Economics.
    2. Alesina, Alberto & La Ferrara, Eliana, 2005. "Preferences for redistribution in the land of opportunities," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 897-931, June.
    3. Amiel,Yoram & Cowell,Frank, 1999. "Thinking about Inequality," Cambridge Books, Cambridge University Press, number 9780521466967, January.
    4. Roland Benabou & Efe A. Ok, 2001. "Social Mobility and the Demand for Redistribution: The Poum Hypothesis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 447-487.
    5. Thomas Piketty, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 551-584.
    6. Corneo, Giacomo & Gruner, Hans Peter, 2002. "Individual preferences for political redistribution," Journal of Public Economics, Elsevier, vol. 83(1), pages 83-107, January.
    7. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    8. Ignacio Palacios-Huerta & Roberto Serrano & Oscar Volig, 2001. "Rejecting Small Gambles under Expected Utility: a Comment on Rabin," Working Papers 2001-05, Brown University, Department of Economics.
    9. Fong, Christina, 2001. "Social preferences, self-interest, and the demand for redistribution," Journal of Public Economics, Elsevier, vol. 82(2), pages 225-246, November.
    10. Hans Peter Gruner & Giacomo Corneo, 2000. "Social Limits to Redistribution," American Economic Review, American Economic Association, vol. 90(5), pages 1491-1507, December.
    11. Cowell, Frank A. & Schokkaert, Erik, 2001. "Risk perceptions and distributional judgments," European Economic Review, Elsevier, vol. 45(4-6), pages 941-952, May.
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    Cited by:

    1. Pfarr Christian & Ulrich Volker, 2011. "Discrete-Choice-Experimente zur Ermittlung der Präferenzen für Umverteilung," Review of Economics, De Gruyter, vol. 62(3), pages 232-262, December.
    2. John Morrow & Michael Carter, 2013. "Left, Right, Left: Income, Learning and Political Dynamics," NBER Working Papers 19498, National Bureau of Economic Research, Inc.
    3. Neustadt, Ilja & Zweifel, Peter, 2010. "Is the Welfare State Sustainable? Experimental Evidence on Citizens' Preferences for Redistribution," MPRA Paper 22233, University Library of Munich, Germany.
    4. Lisa Wilder, 2013. "Generational Differences in Attitude toward Income Redistribution in the Baltic States: A Cohort Analysis," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 5(2).
    5. Claudia M. Buch & Christoph Engel, 2012. "The Tradeoff Between Redistribution and Effort: Evidence from the Field and from the Lab," CESifo Working Paper Series 3808, CESifo.
    6. Bernasconi, Michele & Neunhoeffer, Frieder, 2023. "The income inequality trap: When redistributive preferences do not correct greater inequality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 107(C).
    7. Sergio Beraldo & Massimiliano Piacenza & Gilberto Turati, 2014. "«Must Reward Hard Work»? An Experiment on Personal Responsibility and Preferences for Redistribution," CSEF Working Papers 377, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    8. Quan, Ji & Shi, Yuang & Wang, Xianjia, 2023. "Effect of fairness-based sympathy and retaliation on cooperation in multi-player dilemma games," Applied Mathematics and Computation, Elsevier, vol. 449(C).
    9. Bozzano, Monica & Profeta, Paola & Puglisi, Riccardo & Scabrosetti, Simona, 2024. "Women’s voice on redistribution: From gender equality to equalizing taxation," European Journal of Political Economy, Elsevier, vol. 81(C).
    10. Carter, Michael & Morrow, John, 2012. "Left, right, left: income dynamics and the evolving political preferences of forward-looking Bayesian voters," LSE Research Online Documents on Economics 58159, London School of Economics and Political Science, LSE Library.
    11. Bérgolo, Marcelo & Burdin, Gabriel & Burone, Santiago & De Rosa, Mauricio & Giaccobasso, Matias & Leites, Martin, 2022. "Dissecting inequality-averse preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 782-802.
    12. Claudia M. Buch & Christoph Engel, 2012. "Effort and Redistribution: Better Cousins Than One Might Have Thought," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2012_10, Max Planck Institute for Research on Collective Goods, revised Sep 2014.
    13. repec:dau:papers:123456789/4382 is not listed on IDEAS
    14. Rainer, Helmut & Siedler, Thomas, 2008. "Subjective income and employment expectations and preferences for redistribution," Economics Letters, Elsevier, vol. 99(3), pages 449-453, June.

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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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