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2016 | OriginalPaper | Buchkapitel

15. Social Capital, Household Income, and Preferences for Income Redistribution

verfasst von : Eiji Yamamura

Erschienen in: Behavioral Economics of Preferences, Choices, and Happiness

Verlag: Springer Japan

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Abstract

This chapter explores how social capital influences individual preferences for income redistribution. Social capital is measured by participation in community activities. After controlling for individual characteristics, I find that people are more likely to express preferences for income redistribution in areas with higher rates of community participation. This is more clearly so in high-income groups than in low-income groups. I infer that individuals’ preferences for income redistribution are influenced by psychological externalities. Because the data is from surveys, I also consider the role of expressive behavior. I also consider the hypothesis that behavior is influenced by social distance.

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Using cross-country data, Bergh and Bjørnskov (2011) found that trust aids the creation of welfare states, reducing inequality. Algan and Cahuc (2010) also addressed a similar question.

Social capital possibly influences the fairness of people, leading to change the equilibrium level of redistribution (Galasso 2003).

It should be noted that Hypothesis 1 will only hold if comparison effects actually exist. This is because comparison effects are difficult to separate from purely individual aspiration effects at the individual level (Stutzer 2004).

There are possibly other mechanisms with which to arrive at Hypothesis 2. For instance, richer people support redistribution from purely moral or altruistic motives. In addition, it can be argued that richer people tend to display their charitable natures to the poor only in surveys, and in reality they are not.

Data for this secondary analysis, “Japanese General Social Surveys (JGSS), Ichiro Tanioka,” was provided by the Social Science Japan Data Archive, Information Center for Social Science Research on Japan, Institute of Social Science, The University of Tokyo.

Surveys were not conducted in 2004 and 2007. Surveys were conducted in 2009 and 2010 but the data is not available.

In the original dataset, annual earnings were grouped into 19 categories, and we assumed that everyone in each category earned the midpoint value. For the top category of “23 million yen and above,” I assumed that everybody earned 23 million yen. Of the 11,808 observations used in the regression estimations, there were only 116 observations in this category. Therefore, the problem of top-coding should not be an issue here.

Trust is regarded as a kind of social capital (Putnam 2000). Generalized trust is predicted to be related with preferences or the acceptance of policies that actively redistribute strangers (Uslaner 2008). JGSS data contains variables that will capture the degree of generalized trust. However, the proxy variable for generalized trust is considered as an endogenous variable because the causality between redistribution preferences and generalized trust is ambiguous. Therefore, estimation results are thought to suffer from endogeneity bias if the proxy for generalized trust is included as an independent variable. It is for this reason that the proxy for generalized trust is not included as an individual-level control variable.

The rates of redistribution preferences for Gunma and Saga prefectures are 0.45 and 0.46, respectively.

This addendum has been newly written for this book chapter.

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Titel: Social Capital, Household Income, and Preferences for Income Redistribution
verfasst von: Eiji Yamamura
Verlag: Springer Japan
Buch: Behavioral Economics of Preferences, Choices, and Happiness
Print ISBN: 978-4-431-55401-1

Electronic ISBN: 978-4-431-55402-8

Copyright-Jahr: 2016
DOI: https://doi.org/10.1007/978-4-431-55402-8_15