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

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

<p>In simple language and subject to some assumptions:</p>

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

<p>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. </p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

CC BY-SA 4.0
2020-05-22T18:51:13.007Z
It’s true that 2nd welfare theorem says that - but virtually the whole public economics literature exists because 2nd welfare theorem requires there to be no information asymmetry between government and people as well as government being run by socially benevolent social planner -which is not satisfied- I would agree that recent advances in public economics and it’s not just  might have caused this shift but I don’t think you can attribute to the theorem itself. Also the second welfare theorem was already well known back in 70s so how could it even explain shift between 90s and 2000s?
1muflon1
CC BY-SA 4.0
2020-05-22T18:57:11.283Z
Rather what I think that caused the change was 1. There were great strides made in the areas of optimal income taxation and redistribution. 2. Study of inequality ceased to be taboo. 3. Nowadays we can make better evaluation of social programs and make them in evidence based way thanks to randomizes control trials and revolutions in IT. 4. Actual shifts in political ideology/culture over time especially in US
1muflon1
CC BY-SA 4.0
2020-05-22T18:58:38.557Z
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.
BB King
CC BY-SA 4.0
2020-05-22T19:02:30.767Z
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.
BB King
CC BY-SA 4.0
2020-05-22T19:04:09.173Z
no I agree on everything else with you except for the attribution to the second welfare theorem- I think that’s a stretch but it’s also difficult to answer broad questions like this so I see where you are coming from
1muflon1
CC BY-SA 4.0
2020-05-23T21:31:14.893Z
@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.
Philip Meyer
CC BY-SA 4.0
2020-05-23T21:39:19.507Z
*as long as lump-sum taxes are used.
Philip Meyer
CC BY-SA 4.0
2020-05-23T21:46:02.740Z
Actually, I don't believe the 2nd welfare theorem factors-in possible changing incentives of poor people receiving the money does it?
Philip Meyer
CC BY-SA 4.0
2020-05-23T22:04:00.423Z
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.
BB King
CC BY-SA 4.0
2020-05-24T00:12:49.893Z
Doesn't governmental transfer of money mean someone is being paid for something they did not do? Or paid for being poor?
Philip Meyer
CC BY-SA 4.0
2020-05-24T00:23:53.560Z
That does not (necessarily) destroy incentives (in this context).
BB King
CC BY-SA 4.0
2020-05-22T17:59:23.563Z
2020-05-22T17:59:23.563Z
BB King
<p>Proposition 28 from this 2000 survey (<a href="https://www.tandfonline.com/doi/abs/10.1080/00220480309595230" rel="nofollow noreferrer">Fuller and Geide-stevenson 2010</a>) 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. </p>

<p>That was an increase over 1990. </p>

<p>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?</p>

CC BY-SA 4.0
2020-05-23T07:01:12.100Z
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.
Giskard
<reference-request><welfare-economics><social-welfare>
Theory of and studies on the long-term effect of governmental redistribution
Philip Meyer
# Theory of and studies on the long-term effect of governmental redistribution

(Asked by: username_0 on 2020-05-22)

Proposition 28 from this 2000 survey ([Fuller and Geide-stevenson 2010](https://www.tandfonline.com/doi/abs/10.1080/00220480309595230)) 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?

**Tags:** reference-request, welfare-economics, social-welfare

> **Comments:**
> **username_1**: 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.  

---

## 1 answers

### Answer by username_2 on 2020-05-22. Score: 4 | Accepted answer

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.

> **Comments:**
> **username_3**: It’s true that 2nd welfare theorem says that - but virtually the whole public economics literature exists because 2nd welfare theorem requires there to be no information asymmetry between government and people as well as government being run by socially benevolent social planner -which is not satisfied- I would agree that recent advances in public economics and it’s not just  might have caused this shift but I don’t think you can attribute to the theorem itself. Also the second welfare theorem was already well known back in 70s so how could it even explain shift between 90s and 2000s?  
> **username_3**: Rather what I think that caused the change was 1. There were great strides made in the areas of optimal income taxation and redistribution. 2. Study of inequality ceased to be taboo. 3. Nowadays we can make better evaluation of social programs and make them in evidence based way thanks to randomizes control trials and revolutions in IT. 4. Actual shifts in political ideology/culture over time especially in US  
> **username_2**: 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.  
> **username_2**: 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.  
> **username_3**: no I agree on everything else with you except for the attribution to the second welfare theorem- I think that’s a stretch but it’s also difficult to answer broad questions like this so I see where you are coming from  
> **username_0**: @username_2 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.  
> **username_0**: *as long as lump-sum taxes are used.  
> **username_0**: Actually, I don't believe the 2nd welfare theorem factors-in possible changing incentives of poor people receiving the money does it?  
> **username_2**: 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.  
> **username_0**: Doesn't governmental transfer of money mean someone is being paid for something they did not do? Or paid for being poor?  
> **username_2**: That does not (necessarily) destroy incentives (in this context).  

---

