A Tullock Index for Assessing the Efficiency of Redistribution

I propose two alternative versions of a "Tullock Index" for assessing the efficiency of redistribution. In the spirit of the Atkinson (1970) inequality index, the Tullock Index is constructed with reference to either (A) the maximum inequality reduction attainable with current transfer spending, or (B) the minimum transfer spending necessary to achieve current post-transfer inequality. Deviations from either of these ideals represent inefficiencies in the transfer system, insofar as its purported justification is an egalitarian one. Using Current Population Survey (CPS) microdata from 1988 to 2014, I construct annual estimates of the Tullock Index at the national level for the United States. The Tullock Index is increasing over this period, suggesting the pattern of redistribution has become less efficient. State-level panel fixed-effects estimates show that redistributional inefficiency is related to higher state-level poverty rates, lower employment-to-population ratios, and lower levels of overall employment. Finally, comparisons of the Tullock Index to other state-level indicators of institutional quality suggest that the efficiency of redistribution responds to changes in the quality of local governance