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Details a behavioral theory of economic welfare that overlaps and extends the global theoretical framework contained in Pareto Optimality, with significant public policy implications. The essence of this framework is contained in Adam Smith’s the Wealth of Nations where it is argued that the economic welfare of society cannot be augmented if the material level of well‐being of the working population is reduced, even if the economy experiences growth. Moreover, it is argued that there need not be an equity‐efficiency trade‐off in a competitive market economy to the extent that wages positively affect productivity and do not increase production costs. Therefore, shifting from a low to a high wage economy is welfare improving. Smith, in effect, argues that one can have economic ‘justice’ and economic efficiency where the former is necessary to the latter. The behavioral model of economic welfare paints a dynamic picture of economic welfare in contradistinction to the static framework provided by Pareto Optimality wherein the conditions of Pareto Optimality need not be violated.

The purpose of this paper is to investigate the role played by the geographic distance between the poor and non‐poor in the local demand for income redistribution and, in particular, to provide an empirical test of the geographically limited altruism model proposed by Pauly, incorporating the possibility of participation costs associated with the provision of transfers.

First, the authors motivate the discussion by allowing for an “iceberg cost” as participation for the poor individuals in Pauly's original model. Next, using data from the 2000 Brazilian Census and a panel based on the National Household Sample Survey (PNAD) from 2001 to 2007, the authors estimate the effect of the proximity between poor and non‐poor on the demand for redistribution.

All of the authors' distance‐related explanatory variables indicate that an increased proximity between poor and non‐poor is associated with better targeting of the programs (demand for redistribution). For instance, a one‐hour increase in the time spent commuting by the poor reduces the targeting by 3.158 percentage points. This result is similar to that of Ashworth et al., but is definitely not due to the program leakages. To empirically disentangle participation costs and spatially restricted altruism effects, an additional test is conducted using unique panel data based on the 2004 and 2006 PNAD, which assess the number of benefits and the average benefit value received by beneficiaries. The estimates suggest that both cost and altruism play important roles in the demand for redistribution and might reduce targeting in Brazil. Lastly, the results indicate that “size matters”; i.e. the budget for redistribution has a positive impact on targeting.

Our results suggest that a totally centralized supply of transfers may be more inefficient than local redistribution in terms of targeting, either due to higher participation costs or because of the eventual greater geographical distance between the national median voter and poor individuals. However, a partial role for the federal government, such as providing funds for redistribution, seems to improve targeting.

In particular, the paper provides an empirical test for the geographically limited altruism model proposed by Pauly, incorporating the possibility of participation costs associated with the provision of transfers. The authors motivate this discussion by adding the possibility of distance‐related “iceberg costs” of delivering benefits to poor individuals and show that these two effects of distance may act to lower the demand for transfers, making it difficult to distinguish between the two effects. These two effects of distance act by lowering the demand for transfers, making it difficult to disentangle the effect of altruism from the effect of cost. The authors' empirical strategy seems to allow to identify each of them and to provide a suggestion on whether it is advantageous to carry out redistribution at the local level.

The paper seeks to analyse the impact of different public policies on inequality, unemployment, growth and the tax burden.

A dynamic general equilibrium model is built, in which growth is driven by endogenous technical progress, to analyse the impacts of several policies (minimum wage, redistribution and R&D subsidies financed by an income tax).

All policies except pure redistribution are better than non‐intervention in terms of growth. The authors distinguish three major policy patterns. The Anglo‐Saxon model is characterised by high growth, high inequality, low unemployment and a low tax burden. The Nordic model combines high growth, low inequality and low unemployment, and a high tax burden. The Continental European model puts together medium inequality and a medium tax burden, and higher long‐term growth is paid for by high unemployment.

The model could be extended by the introduction of educational policy.

The paper distinguishes three configurations that capture the main features of the developments in Anglo‐Saxon countries, Scandinavian countries, and Continental European countries in the 1990s. It thereby provides a general framework to analyse and compare these experiences.

Let there be two individuals: “rich,” and “poor.” Due to inefficiency of the income redistribution policy, if a social planner were to tax the rich in order to transfer to the poor, only a fraction of the taxed income would be given to the poor. Under such inefficiency and a standard utility specification, a Rawlsian social planner who seeks to maximize the utility of the worst-off individual will select a different allocation of incomes than a utilitarian social planner who seeks to maximize the sum of the individuals’ utilities. However, when individuals prefer not only to have more income but also not to have low status conceptualized as low relative income, and when this distaste is incorporated in the individuals’ utility functions with a weight that is greater than a specified critical level, then a utilitarian social planner will select the very same income distribution as a Rawlsian social planner.

It was not until the late 1960s that housing attracted much attention from academic social scientists. Since that time the literature has expanded widely and diversified, establishing housing with a specialised status in economics, sociology, politics, and in related subjects. As we would expect, the new literature covers a technical, statistical, theoretical, ideological, and historical range. Housing studies have not been conceived and interpreted in a monolithic way, with generally accepted concepts and principles, or with uniformly fixed and precise methodological approaches. Instead, some studies have been derived selectively from diverse bases in conventional theories in economics or sociology, or politics. Others have their origins in less conventional social theory, including neo‐Marxist theory which has had a wider intellectual following in the modern democracies since the mid‐1970s. With all this diversity, and in a context where ideological positions compete, housing studies have consequently left in their wake some significant controversies and some gaps in evaluative perspective. In short, the new housing intellectuals have written from personal commitments to particular cognitive, theoretical, ideological, and national positions and experiences. This present piece of writing takes up the two main themes which have emerged in the recent literature. These themes are first, questions relating to building and developing housing theory, and, second, the issue of how we are to conceptualise housing and relate it to policy studies. We shall be arguing that the two themes are closely related: in order to create a useful housing theory we must have awareness and understanding of housing practice and the nature of housing.

The purpose of this paper is to define economic security as a country's ability to redistribute incomes through a strong governance structure by practicing rule of law, eliminating corruption and a government that acts as a facilitator by formulating effective fiscal and monetary policy and regulation.

The paper uses two stage instrumental analysis and carries out second order asymptotic tests to establish the validity of the instruments.

The results suggest that courts that implement national laws effectively and punish corruption and a government that has balance budgets and investment friendly monetary policy ensures economic security by means of welfare friendly outcomes that favor the incomes of the poor and middle class. There is also evidence that redistribution takes place from rich to the poor. As a result, income and wage inequalities fall down.

The paper adds to the literature on institutions by providing empirical evidence on the relationship between institutions and inequality.