Preferences for redistribution and pensions. What can we learn from experiments?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Redistribution is an inevitable feature of collective pension schemes and economic experiments have revealed that most people have a preference for redistribution that is not merely inspired by self-interest. Interestingly, little is known on how these preferences interact with preferences for different pension schemes. In this paper we review the experimental evidence on preferences for redistribution and suggest some links to redistribution through pensions. For that purpose we distinguish between three types of situations. The first deals with distributional preferences behind a veil of ignorance. In the second type of situation, individuals make choices in front of the veil of ignorance and know their position. Finally, we discuss situations in which income is determined by interdependent rather than individual choices. In the closing parts of the paper we discuss whether and how these experimental results speak to the redistribution issues of pensions. For example, do they argue for or against mandatory participation? Should we have less redistribution and more actuarial fairness? How does this depend on the type of redistribution involved? Terms of use: Documents inJEL-Code: C90, D01, D03, D63, D64, H55.

The Tradeoff between Redistribution and Effort: Evidence from the Field and from the Lab

“…Our experiment most importantly differs in two respects: We implement a real effort task, and we exogenously impose (in one stage) effort and (in the next stage) a redistribution scheme. Almost all low and most medium earners vote for this scheme, as does a third of the high earners (further, less closely related experiments are reported by Tausch, Potters et al 2010).…”

Justice Under Uncertainty

“…These early studies were employing surveys and vignettes and have initiated a literature that greatly improved our knowledge about peoples' justice views (see, e.g., Schokkaert and Overlaet 1989, Schokkaert and Capeau 1991, Gächter and Riedl 2006, Faravelli 2007, Konow 2009; see also Konow 2003, Tausch et al 2013. Konow (2000) was the first to use incentivized experiments in justice research.…”

Do people really want freedom of choice? Assessing preferences of pension holders

“…Solidarity is a key element in many public pension systems and in most occupational pension systems that offer supplementary pension rights. As argued by Tausch, Potters and Riedl (), solidarity can be organized at different levels. They distinguish between risk solidarity, subsidizing solidarity, and income solidarity.…”

“…In all cases, solidarity implies some form of redistribution of income. Risk solidarity becomes visible in cases where risk sharing “implies that ex post the lucky support the unlucky” (Tausch et al, , p. 298). Subsidizing solidarity involves ex ante transfers from one group to another, as in the case of longevity risk where women are expected to live longer than men.…”