Repeated shocks and preferences for redistribution

A society that believes wealth to be determined by random “luck” rather than by merit, demands more redistribution. The theoretical literature shows that any increase in the volatility of income caused by unpredictable adverse shocks implies a higher support for redistribution. We present evidence of this behavior by exploiting a natural experiment provided by the L’Aquila earthquake in 2009, which hit a large area of Central Italy through a series of destructive shakes over eight days. Matching detailed information on the ground acceleration registered during each shock with survey data about individual opinions on redistribution we show that the average intensity of the shakes is associated with subsequent stronger beliefs that, for a society to be fair, income inequalities should be levelled by redistribution. The shocks, however, are not all alike. We find that only the last three shakes - occurred on the fourth and the eighth day of the earthquake - have a statistically significant impact. Overall, we find that the timing and repetition of the shock play a role in shaping redistributive preferences.
Revision posted January 24, 2019. A previous version of this paper circulated under the title “Natural disasters and demand for redistribution: lessons from an earthquake”.


Issue Date:
May 24 2018
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/273143
Language:
English
Total Pages:
36
JEL Codes:
H10; H53; D63; D69; Z1
Series Statement:
15.2018




 Record created 2018-05-24, last modified 2020-10-28

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