Need-based Redistribution as a Social Contract

• Applicant: Professor Dr. Stefan Traub
• Subject Area: Economic Policy, Applied Economics ; Empirical Social Research ; Political Science
• Term: from 2014 to 2023
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 240285356

The distribution of lifetime incomes exhibits an enormous degree of stochasticity. The redistributing welfare state can be characterized as a special type of insurance device that reduces the variance of lifetime incomes. Subproject D2 "Need-based Redistribution as a Social Contract" analyses theoretically as well as by means of laboratory experiments the economic incentive effects caused by the welfare state in the context of productive investment decisions made by involved but impartial observers. The 1. funding period showed that need-based redistribution is sustainable in terms of reducing inequality and increasing investment. Based on this result, in the 2. funding period, D2 will investigate different conceptions of need-based justice, which arise from ex-ante heterogeneity with respect to risk preferences and group identity. How does the impartial observer’s investment behavior change in the presence of heterogeneity? How does differentiation of need-based redistribution influence the acceptance of the distribution outcome by the group members? Will the impartial observer discriminate against group members with different characteristics?

• DFG Programme: Research Units
• Subproject of: FOR 2104: Needs-Based Justice and Distribution Procedures
• International Connection: Austria
• Co-Investigator: Professor Dr. Bernhard Kittel