A Different Rationale for Redistribution: A Comment
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Introduction–What Do Cullis et al. Do?
John Cullis, John Hudson and Philip Jones (2009) set out to provide an answer for an old question: Is there a role for redistribution to increase average happiness? First, they start by outlining a more modern, advanced version of the piece of economic theory sometimes referred to as the ‘Lerner argument’, a simple version of which was first brought forward by Abba Lerner (1944). This careful outline of modern theory, including effects arising out of individual peer-group comparisons, suggests a clear rationale for redistribution through progressive taxation and regressive transfers.
Second, estimating the individual-level determinants of life satisfaction/happiness in a large sample covering the EU-15 countries from the EuroBarometer, Cullis et al. nonetheless find no evidence of a robust effect of redistribution through regressive transfers, contrary to the theory they carefully lay out in their paper, as the evidence for a convex income effect...
KeywordsComparison Theory Country Fixed Effect Clear Rationale Average Happiness Income Position
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