Proposition 28 from this 2000 survey (Fuller and Geide-stevenson 2010) of American economists shows that 49% of American Economics Association members agree, and 31% agree with provisions, that it is a legitimate role for the government to redistribute wealth.

That was an increase over 1990.

Policy beliefs rely heavily on values, but is there substantial theory or evidence showing that the policy of governmental redistribution improves either long-term economic growth or long-term absolute well-being of poor people?

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    $\begingroup$ Aside from the somewhat unfortunate title I find that the question is clear. I edited the title to remove any possible confusion. @Philipmeyer if you disagree roll back the edit. $\endgroup$
    – Giskard
    May 23, 2020 at 7:01

1 Answer 1


This is a very broad question and no one except the respondents in question know exactly what they believe and why.

However, I suspect one important result in this context is the Second Welfare Theorem.

In simple language and subject to some assumptions:

The First Welfare Theorem tells us that any competitive equilibrium leads to a Pareto efficient allocation of resources.

The Second Welfare Theorem tells us that almost any Pareto optimal equilibrium can be achieved via the competitive mechanism, provided appropriate lump-sum taxes and transfers are imposed on individuals and firms.

The main idea here is that markets lead to efficiency. Thus, no intervention of the government is required. However, a situation where someone holds every good and the rest of the population holds none, is also a Pareto efficient distribution. This distribution can hardly be considered as perfect under any welfare definition. The second theorem helps us here.

The two main issues economists are concerned about in this context are efficiency and distribution. The first is all about not wasting resources and maximizing the total economic pie. The second issue is about distributing that pie. The first theorem tells us that a free market achieves an efficient allocation. The second tells us that we can achieve any distribution we want through transfers without harming efficiency.

It is unlikely that the one particular efficient allocation which results from a free market (out of the endless possibilities) also is optimal from a distributional point of view (and optimal distribution will depend on a society's preferences). Luckily, according to the Second Theorem, we can use transfers to achieve both optimal efficiency and distribution. Hence, it is unsurprising that many economists would be in favor of that.

The controversies start with discussion how exactly to design those transfers. Any economist would agree that lump sum taxes and distribution are optimal. However, these taxes are considered impossible politically, which means we often have to rely on transfer mechanisms that trade-off efficiency and distribution.

About your question "is there substantial evidence showing that the policy of governmental redistribution improves absolute well-being of poor people?": The answer must be yes by definition. If we give poor people more resources it can be safe to assume that their economic well-being is improved.

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    $\begingroup$ Completely agree with you. At best, I am aiming to provide a partial answer and cannot answer the increase between 90s and 2000s. However, my sense is that it is unsurprising that anyone familiar with the welfare theorems (i.e. any economist) would agree with the general survey statement as it is posed in OPs question. The answer that "I agree (with provisions), that it is a legitimate role for the government to redistribute wealth." to an economist might simply mean I agree that it is legitimate under the provisions that all the necessary assumptions hold. $\endgroup$
    – BB King
    May 22, 2020 at 18:58
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    $\begingroup$ I acknowledge such a line of argument is a bit speculative, but I would argue any answer to a question of what some respondent was thinking may be speculative to some degree. $\endgroup$
    – BB King
    May 22, 2020 at 19:02
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    $\begingroup$ @BBKing Regarding your last paragraph, I specified "long-term absolute well-being of poor people" because of the theoretical long-term tradeoff between inequality and growth. Poor people would be helped initially, but long-term losses in innovation could make them worse off eventually. But I see that the Second Welfare Theorem shows this is not necessarily true in theory. $\endgroup$ May 23, 2020 at 21:31
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    $\begingroup$ *as long as lump-sum taxes are used. $\endgroup$ May 23, 2020 at 21:39
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    $\begingroup$ There are no changing incentives from lump sum transfers in that framework as far as I understand it. This is because decisions are made by marginal analysis and there are no reservation wages etc. $\endgroup$
    – BB King
    May 23, 2020 at 22:04

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