Group Loyalty and the Taste for Redistribution

Group Loyalty and the Taste for Redistribution

2001, vol. 109, no. 3 | Erzo F. P. Luttmer
This paper examines the determinants of individual support for welfare spending in the United States, using self-reported attitudes from the General Social Survey (GSS). The author finds that individuals' preferences for income redistribution are influenced not only by financial self-interest but also by interpersonal preferences, characterized by a negative exposure effect and racial group loyalty. The negative exposure effect means that individuals decrease their support for welfare as the welfare recipiency rate in their community increases. Racial group loyalty, on the other hand, indicates that individuals increase their support for welfare spending as the share of local recipients from their own racial group rises. These findings help explain why welfare benefits are relatively low in racially heterogeneous states. The paper also discusses the robustness of these results and their implications for understanding the relationship between demographic heterogeneity and redistribution.This paper examines the determinants of individual support for welfare spending in the United States, using self-reported attitudes from the General Social Survey (GSS). The author finds that individuals' preferences for income redistribution are influenced not only by financial self-interest but also by interpersonal preferences, characterized by a negative exposure effect and racial group loyalty. The negative exposure effect means that individuals decrease their support for welfare as the welfare recipiency rate in their community increases. Racial group loyalty, on the other hand, indicates that individuals increase their support for welfare spending as the share of local recipients from their own racial group rises. These findings help explain why welfare benefits are relatively low in racially heterogeneous states. The paper also discusses the robustness of these results and their implications for understanding the relationship between demographic heterogeneity and redistribution.
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