Preferences for efficiency and redistribution : an experiment using charitable donations

Understanding the tradeoff between preferences for redistribution and efficiency is a central question in public finance. Existing experimental work examining this question formalize efficiency in “leaky bucket” choice tasks where possible redistribution schemes are exogeneously pre-selected by the experimenter. These design choices place great (negative) emphasis on the cost of redistribution and restrict subjects’ ability to express preferences for alternative redistribution schemes outside the set pre-selected by the experimenter. We explore preferences for redistribution and efficiency in an experiment on charitable donations which avoids these issues. We find evidence for redistributive preferences, particularly where “taxation” is focused on the leader, and that preferences for efficiency tend to dominate those for redistribution