Social preferences and redistribution under direct democracy

There is growing evidence on the roles of fairness and social preferences as fundamental human motives, in general, as well as in voting contexts. In contrast, models of political economy are based on sel sh-voters who derive utility solely from own payo¤. We examine the implications of introducing voters with social prefer- ences, as in Fehr and Schmidt (1999), in a simple general equilibrium model with endogenous labour supply. We demonstrate the existence of a Condorcet winner for voters, with heterogeneous social preferences (including purely sel sh preferences), using the single crossing property of voters preferences. Relatively small changes in the preference of voters can have relatively large redistributive consequences. We im- plications for the size of the welfare state; regional integration; and issues of culture, identity and immigration