Ideology and the State: an Analysis of the Connection between Fairness, Altruism, and Redistribution

The aim of this thesis is to overcome the simplistic idea of homo economicus, by exploring the voting behaviour of heterogeneous agents whose actions are also influenced by their view of social justice and altruism. The thesis consists of four essays which explore the role of non-economic variables in defining individuals preferences. The first essay develops the path-breaking approach initiated by Alesina and Angeletos (2005). It takes in consideration citizens' demand for fairness, and analyses their political choices in a multidimensional scenario. We show how including fairness explains various observed correlations between inequality, redistribution and growth. The second essay analyses the connection between ideology and public schooling. It presents a model in which individuals care about their personal wealth, as well as about the public expenditure, which is allocated by the government between education and the public good. The third essay deepens the analysis of the connection between the ideas of fairness and redistribution and how these evolve over time, and considers a society in which two instruments are available: an income tax and a wealth tax. To avoid double taxation of income, a tax differential is computed, which means that the income tax is subtracted from the wealth tax. The fourth essay analyses the current British Government's "Big Society" plan, which is based on the idea that granting more freedom to local communities and volunteers will compensate for a withdrawal of public agencies and spending. The main conclusion that can be drawn from this thesis is that ideology and altruism deeply influence individuals' preferences and behaviour and can affect political elections and economic fundamentals

The evolution of ideology, fairness and redistribution

Ideas about what is "fair" above and beyond the individuals' position in the income ladder determine preferences for redistribution. We study the dynamic evolution of different economies in which redistributive policies, perception of fairness, inequality and growth are jointly determined. We show how including fairness explains various observed relationship between inequality, redistribution and growth. We also show how different beliefs about fairness can keep two otherwise identical countries in different development paths for a very long time.Inequality, Fairness, Redistribution, Ideology.

Public Spending and Volunteering: "The Big Society", Crowding Out, and Volunteering Capital.

The current British Government's "Big Society" plan is based on the idea that granting more freedom to local communities and volunteers will compensate for a withdrawal of public agencies and spending. This idea is grounded on a widely held belief about the relationship between government and volunteering: a high degree of government intervention will cause a crowding out of voluntary activity. Up to now, however, the crowding out hypothesis has hardly been supported by any empirical evidence or solid theoretical foundations. We develop a simple theoretical model to predict how fiscal policy affects the individual decision to volunteer or not. The predictions of the model are tested through the econometric analysis of two survey data sets, and interpretative analysis of narratives of local volunteers and public officials. Contrary to conventional wisdom, our results suggest that volunteering, by the individuals in the actively working population, declines when government intervention is decreased.Volunteering, Labor Supply, Public Goods, Altruism.

The evolution of ideology, fairness and redistribution

Ideas about what is "fair" above and beyond the individuals' positionin the income ladder influence preferences for redistribution. We study the dynamic evolution of different economies in which redistributive policies, perception of fairness, inequality and growth are jointly determined. We show how including fairness explains various observed correlations between inequality, redistribution and growth. We also show how different beliefs about fairness can keep two otherwise identical countries in different development paths for a very long time

Public spending and volunteering : 'The Big Society', crowding out, and volunteering capital

The current British Government's "Big Society" plan is based on the idea that granting more freedom to local communities and volunteers willcompensate for a withdrawal of public agencies and spending. This ideais grounded on a widely held belief about the relationship between government and volunteering: a high degree of government intervention willcause a crowding out of voluntary activity. Up to now, however, the crowding out hypothesis has hardly been supported by any empirical evidenceor solid theoretical foundations. We develop a simple theoretical modelto predict how fiscal policy a¤ects the individual decision to volunteer or not. The predictions of the model are tested through the econometricanalysis of two survey data sets, and interpretative analysis of narratives of local volunteers and public officials. Contrary to conventional wisdom,our results suggest that volunteering, by the individuals in the actively working population, declines when government intervention is decreased

Will a Shrink Make you Richer?:Gender Differences in the Effects of Psychotherapy on Labour Efficiency

This paper provides a first theoretical and empirical analysis of the effects of psychotherapy on individual productivity. We build a simple model in which a deterioration of mental health endogenously causes a decrease in productivity, which is counterbalanced by psychotherapy. We test our hypotheses on the British Household Panel Survey data. We find that individuals suffering from mental health problems benefit economically from consulting a psychotherapist. Moreover, we find that the returns are higher for men than for women, even though women are more likely to seek help

'The Big Society', public expenditure, and volunteering

The debate on volunteering has paid insufficient attention to the relationship between public spending and volunteering. Recently, the importance of this relationship was highlighted by the current British government's "Big Society" plan, which asserts that withdrawing public agencies and spending will be compensated by an increase in volunteering. This idea is based on the widely held belief that a high degree of government intervention decreases voluntary activities. This paper uses a multidisciplinary approach to develop a more refined understanding of how public spending affects the decision to volunteer. A theoretical model conceptualizes this relationship in terms of time donation by employed individuals. The model is empirically developed through an econometric analysis of two survey data sets and interpretative analysis of narratives of local volunteers and public professionals. The results suggest that volunteering is likely to decline when government intervention is decreased and recommend a collaborative approach to sustaining volunteering

To get Rich is Glorious, but only if Fairly

The United States witnessed an increase in pre-tax inequality, a rise in the wealth-to-income ratio, and an extraordinary rise in top income inequality in the last four decades. However, income and wealth tax rates did not increase. To explain this, we build a political economy model in which people care about fairness and approve of getting rich due to creating value rather than extracting value from others. Simulations and calibrations show that rational voters can allow for low levels of redistribution even as they observe a sharp increase in inequality

The Evolution of Ideology, Fairness and Redistribution

Ideas about what is "fair" above and beyond the individual's position in the income ladder influence preferences for redistribution. We study the dynamic evolution of different economies in which redistributive policies, perceptions of fairness, inequality and growth are jointly determined. We show how including fairness explains various observed correlations between inequality, redistribution and growth. We also show how different beliefs about fairness can keep two otherwise identical countries in different development paths for a very long time.