This site is under construction

Attitudes to Income Distribution


DARP  

Home

Project's Background, Methodology and Objectives

TheVirtual Laboratory

Researchers

Selected Bibliography

Links

VirtualLab Demo

 

Background

There is a substantial literature on the way in which concepts such as “equity” can be given meaning in an economic context. These are typically expressed in the form of income inequality, poverty or social welfare. However, there is a fundamental problem in that the constructs developed in the economics literature and elsewhere may not accord well with the way lay people view issues of social equity. This raises questions that may impact upon policy design and evaluation: for example the sort of consensus approach to social equity that underlies the concept of "fairness" in the design of taxes and social security systems, or the notion of effectiveness of anti anti-poverty programmes at local or national levels.

1       Intellectual Origins

There are two principal strands to the work of the current workshop group (see section 5 for those involved).

1.1        Social welfare and the economics of income distribution

The researchers involved in the proposed workshop have all been active in aspects of this research (see for example Amiel and Cowell 1999, Cowell 2000, Schokkaert 1992). However much empirical work remains to be done on the structure of personal and social determinants of distributional attitudes.

1.2        Use of experimental techniques in economics

This methodology is now well established in a number of economic applications. It is used to analyse behavioural choices where an econometric approach to market outcomes is inappropriate because of lack of data, measurement difficulties or thinness of samples. Although there is a huge literature on experimental bargaining and the problem of experimental design in that context, similar work on normative economics is still rare.

However related techniques have been applied to normative issues. A prime example is the use of the questionnaire approach (Amiel and Cowell 1999, Gaertner and Jungeilges 1999, Schokkaert and Devooght 1998). This literature has provided important insights on (a) whether or not standard assumptions made in the formulation of distributional orderings are appropriate, and (b) the factors accounting for systematic differences between certain groups of persons in their attitudes on issues such as inequality, poverty and social welfare.

1.2       Types of Experiment

Two types of experimental approach have become established procedures in economics, both of which are relevant to the current proposal:

1.2.1        Participatory Experiments.

Experimental methods involving active participation by subjects have been developed for a variety of media. The role of laboratory experiment is usually performed by interactive computer methods: individual choices from menu-driven programs are logged, and the responses used as a database from which to infer the structure of people's preferences and judgements.

Although computerised approaches to the analysis of distributional attitudes are rare, there are alternative methods, including participation in group decision-making. Notable among these is the pioneering experimental development by Kroll and Davidovitz (1999) that investigates attitudes to inequality and risk simultaneously.

1.2.2        Questionnaire experiments.

A complementary approach to the participatory experiments outlined above is the sort of questionnaire experiment discussed in Amiel (1999). The general form of these experiments has been as follows

·         Respondents are asked numerical and/or verbal questions about alternative distributions in carefully specified hypothetical environments.

·         A high level of participation is ensured by making use of student respondents during part of their lecture/class programme.

·         Internal controls for consistency of responses are incorporated in the question design.

Previous studies focused upon whether responses conform to standard axioms of economic analysis and whether the background of respondents is relevant to the type of response elicited. Results from paper questionnaire studies show that while studying economics and being male increases the likelihood of responses being consistent with economic orthodoxy, other background variables such as income, political attitudes and age are relatively unimportant.

1.3       Computer-Based Methods

There are several reasons why computer-based investigations may yield greater opportunities to the researcher than a paper-based questionnaire:

·         Range of question format. Computer technology can easily provide respondents with a variety of formats of presenting the same information – such as numerical problems, in words, graphics, for example. This enables the researcher to control for biases that may arise from concentrating on a single-format approach as in a paper questionnaire.

·         Greater flexibility. Computer technology also allows the researcher to enrich the content of the experiment: for example respondents can be presented with a variety of specific instances drawn at random, which would be very difficult in a questionnaire study.

·         Validation. It is important to learn whether responses to questionnaire investigation are conditioned by the medium itself – whether for example the procedure of filling in responses in order on a piece of paper subtly affects the way in which the respondents express their views.

1.3.1        Limitations of the laboratory approach

The traditional laboratory used in experimental economics typically consists of a suite of computer equipment on a single site running specially written programs. Apart from the substantial set-up and maintenance costs of the computers and specialised software, this approach incurs other financial penalties such as the recruitment of participants and the monitoring of lengthy experimental sessions. Even where a laboratory is already set up and well maintained the techniques are too inflexible and restrictive for the purposes of developing techniques for investigating distributional judgements rather than, for example, market games.

1.3.2        Internet technology

There are several advantages of replacing the traditional laboratory by an Internet-based procedure:

·         Standard and familiar technology. Respondents are usually familiar with the “feel” of the Internet from work and leisure experience; the interface with respondents does not have to be specially written, as it is managed by a standard browser.

·         Wider participation, By contrast to a fixed, conventional laboratory accommodating perhaps only a dozen participants at one time, the marginal cost of increasing the sample size is comparatively low.

·         Analogy with oral interview: subjects can be allowed to regress, clarify or expand on responses; logging these extensions and modifications is easily be done on the web server.

The Internet experiment can be done in a classroom environment so as to supervise conditions of participation and can be subject to the same controls as laboratory or questionnaire experiments.

1.3.3        Relationship to questionnaire studies

The Internet approach can further develop issues covered in the questionnaire studies

·         Subject involvement in experiments. Subjects may respond differently according to whether they see themselves as directly involved in the world of the questionnaire experiment or in a position of Olympian detachment.

·         Process of evaluation. The basis by which people reach judgements that conform to or deviate from economic orthodoxy can be illuminated by keeping track of a respondent’s progress through an interactive questionnaire that permits regressions and changes of mind.

.