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Please use this identifier to cite or link to this item: http://hdl.handle.net/2381/7442

Title: Fairness and direct democracy
Authors: Dhami, Sanjit
al-Nowaihi, Ali
Issue Date: Sep-2006
Publisher: Dept. of Economics, University of Leicester
Abstract: The median voter model (direct democracy) has wide applicability, but it is based on sel sh voters i.e. voters who derive utility solely from own payo¤. The recent literature has pointed to fairness and concern for others as basic human mo- tives that explain a range of economic phenomena. We examine the implications of introducing fair voters who have a preference for fairness as in Fehr and Schmidt (1999). Within a simple general equilibrium model, we demonstrate the existence of a Condorcet winner for fair voters using the single crossing property of voters preferences. In a fair voter model, unlike a sel sh voter model, poverty can lead to increased redistribution. Mean preserving spreads of income increase equilibrium redistribution. Greater fairness leads to greater redistribution. The introduction of sel sh voters in an economy where the median voter is fair can have a large impact on the redistributive outcome. An empirical exercise using OECD data illustrates the potential importance of fairness in explaining redistribution.
Series/Report no.: Papers in Economics
06/11
Links: http://www.le.ac.uk/economics/research/d(...)
http://hdl.handle.net/2381/7442
Type: Report
Description: Originally published September 2006 as Fairness and Direct Democracy: Theory And Evidence. Updated November 2007
Appears in Collections:Reports, Dept. of Economics

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