Who Should Get Money? Estimating Welfare Preferences in the U.S.

Speaker: Krishna Srinivasan Abstract: Several policy settings, such as income taxation, cash transfers, or in-kind transfers, require us to evaluate whether a reform is desirable or not. One way to evaluate reforms on the basis of their distributional consequences is through the use of welfare weights. Welfare weights measure the value of providing an additional dollar of consumption to any individual in society and thereby capture society’s fairness concerns. We do not currently have good measures of welfare weights in society. Our project fills this gap by identifying the welfare weights of a general population of the U.S. using an experimental approach. In our experiment, participants in the role of “Social Architects” assign welfare weights to seven real “Recipients” with different after-tax incomes that span the income distribution of the U.S. Our results suggest that the average weights of the general population (i) exhibit a surprisingly low degree of progressivity, (ii) exhibit considerable heterogeneity, (iii) and are very similar to the weights implied by existing policies in the U.S.