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Income Inequality, Redistribution and Poverty: Contrasting Rational Choice and Behavioural Perspectives

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  • Malte Lübker
Abstract
Based on the standard axiom of individual utility maximization, rational choice has postulated that higher income inequality translates into greater redistribution by shaping the median voter's preferences. While numerous papers have tested this proposition, the literature has remained divided over the appropriate measure for redistribution. Revisiting the original contribution by Meltzer and Richard, the present paper argues that the median voter hypothesis implies that relative redistribution should increase in line with inequality.

Suggested Citation

  • Malte Lübker, 2012. "Income Inequality, Redistribution and Poverty: Contrasting Rational Choice and Behavioural Perspectives," WIDER Working Paper Series wp-2012-044, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2012-044
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    More about this item

    Keywords

    Distribution; Equality and inequality; Income distribution; Voting;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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