DP10085 Politically Sustainable Probabilistic Minority Targeting

Author(s): Philippe De Donder, Eugenio Peluso
Publication Date: July 2014
Keyword(s): a program for the poor is a poor program, majority voting, paradox of redistribution, social housing in France
JEL(s): D72, H53, I38
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10085

We show that a transfer targeting a minority of the population is sustained by majority voting, however small the minority targeted, when the probability to receive the transfer is decreasing and concave in income. We apply our framework to the French social housing program and obtain that empirically observed departures from these assumptions are small enough that a majority of French voters should support a positive size of this program. We also provide a sufficient condition on this probability function under which more targeting results in a lower equilibrium size of the transfer system.