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Fairness and direct democracy

By Sanjit Dhami and Ali al-Nowaihi

Abstract

Originally published September 2006 as\ud Fairness and Direct Democracy: Theory And Evidence. Updated November 2007The median voter model (direct democracy) has wide applicability, but it is\ud based on sel sh voters i.e. voters who derive utility solely from own payo¤. The\ud recent literature has pointed to fairness and concern for others as basic human mo-\ud tives that explain a range of economic phenomena. We examine the implications of\ud introducing fair voters who have a preference for fairness as in Fehr and Schmidt\ud (1999). Within a simple general equilibrium model, we demonstrate the existence\ud of a Condorcet winner for fair voters using the single crossing property of voters \ud preferences. In a fair voter model, unlike a sel sh voter model, poverty can lead\ud to increased redistribution. Mean preserving spreads of income increase equilibrium\ud redistribution. Greater fairness leads to greater redistribution. The introduction of\ud sel sh voters in an economy where the median voter is fair can have a large impact\ud on the redistributive outcome. An empirical exercise using OECD data illustrates\ud the potential importance of fairness in explaining redistribution

Topics: Redistribution, other regarding preferences, single crossing property, income inequality, American Exceptionalism
Publisher: Dept. of Economics, University of Leicester
Year: 2006
OAI identifier: oai:lra.le.ac.uk:2381/7442

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