Working Paper: CEPR ID: DP10085
Authors: Philippe De Donder; Eugenio Peluso
Abstract: We show that a transfer targeting a minority of the population is sustained by majority voting, however small the minority targeted, when the probability to receive the transfer is decreasing and concave in income. We apply our framework to the French social housing program and obtain that empirically observed departures from these assumptions are small enough that a majority of French voters should support a positive size of this program. We also provide a sufficient condition on this probability function under which more targeting results in a lower equilibrium size of the transfer system.
Keywords: A program for the poor is a poor program; majority voting; paradox of redistribution; social housing in France
JEL Codes: D72; H53; I38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| survey data (C83) | support for public housing system (H53) |
| transfer targeting a minority (J15) | majority voting support (D79) |
| probability of receiving transfer decreases and is concave in income (F16) | majority support for transfer program (F16) |
| targeting increases (L21) | majority voting equilibrium size of the program decreases (D72) |
| income distribution (D31) | political support for transfer system (P26) |
| probability function's elasticity concerning targeting level must be at least one (C51) | median income voter favors smaller system when targeting increases (D72) |
| median income voter’s preferences (D72) | outcome of voting process (D72) |