An Experimental Study of the Poum Hypothesis

24 Pages Posted: 24 Nov 2003

See all articles by Daniele Checchi

Daniele Checchi

Università degli Studi di Milano - Dipartimento di Economia Politica e Aziendale (DEPA); IZA Institute of Labor Economics; IRVAPP

Antonio Filippin

Università degli Studi di Milano; IZA Institute of Labor Economics

Date Written: October 2003

Abstract

The "prospect of upward mobility" (POUM) hypothesis formalised by Benabou and Ok (2001a) finds explicit assumptions under which some individuals that are poorer than the average optimally choose to oppose redistribution policies. The underlying intuition is that these individuals rationally expect to be richer than average in the future. This result holds provided the mobility process is concave in expectations, redistribution policies are expected to last for a sufficiently long period and individuals are not too risk averse. This paper tests the POUM hypothesis by means of a within subjects experiment where the concavity of the mobility process, the degree of social mobility, the knowledge of personal income and the degree of inequality are used as treatments. Other determinants of the demand for redistribution, such as risk aversion and inequality aversion are (partially) controlled for via either the experiment design or the information collected during the experiment. We find that the POUM hypothesis holds under alternative specifications, even when we control for individual fixed effects.

Keywords: POUM, redistribution, mobility, experiment

JEL Classification: C91, D31, D63

Suggested Citation

Checchi, Daniele and Filippin, Antonio, An Experimental Study of the Poum Hypothesis (October 2003). Available at SSRN: https://ssrn.com/abstract=464642 or http://dx.doi.org/10.2139/ssrn.464642

Daniele Checchi (Contact Author)

Università degli Studi di Milano - Dipartimento di Economia Politica e Aziendale (DEPA) ( email )

Milan, 20122
Italy
+39 02 5032 1519 (Phone)
+39 02 5032 1505 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

IRVAPP ( email )

Via Santa Croce 77
Trento, I-38122
Italy

Antonio Filippin

Università degli Studi di Milano ( email )

Milan, 20122
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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