Ideology and the State: an Analysis of the Connection between Fairness, Altruism, and Redistribution

The aim of this thesis is to overcome the simplistic idea of homo economicus, by exploring the voting behaviour of heterogeneous agents whose actions are also influenced by their view of social justice and altruism. The thesis consists of four essays which explore the role of non-economic variables in defining individuals preferences. The first essay develops the path-breaking approach initiated by Alesina and Angeletos (2005). It takes in consideration citizens' demand for fairness, and analyses their political choices in a multidimensional scenario. We show how including fairness explains various observed correlations between inequality, redistribution and growth. The second essay analyses the connection between ideology and public schooling. It presents a model in which individuals care about their personal wealth, as well as about the public expenditure, which is allocated by the government between education and the public good. The third essay deepens the analysis of the connection between the ideas of fairness and redistribution and how these evolve over time, and considers a society in which two instruments are available: an income tax and a wealth tax. To avoid double taxation of income, a tax differential is computed, which means that the income tax is subtracted from the wealth tax. The fourth essay analyses the current British Government's "Big Society" plan, which is based on the idea that granting more freedom to local communities and volunteers will compensate for a withdrawal of public agencies and spending. The main conclusion that can be drawn from this thesis is that ideology and altruism deeply influence individuals' preferences and behaviour and can affect political elections and economic fundamentals