Majority preference for subsidies over redistribution

David Austen-Smith*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

Among other activities, democratic governments redistribute resources directly through tax schemes that explicitly benefit the poor and indirectly through subsidizing particular goods and services that do not. Indeed, in some cases the effective redistribution under subsidy policies is clearly away from the poor. This paper studies when a majority might prefer subsidy policies over direct income redistribution in economies with mean greater than median income. The main result is a set of necessary and sufficient conditions for subsidies to be majority preferred to direct redistribution: in sum, subsidies are strictly majority preferred to redistribution when the gap between median and mean incomes is not 'too great'.

Original languageEnglish (US)
Pages (from-to)1617-1640
Number of pages24
JournalJournal of Public Economics
Volume87
Issue number7-8
DOIs
StatePublished - Aug 1 2003

Keywords

  • Majority preference
  • Price subsidies
  • Redistribution

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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