How Property Shapes Distributional Preferences
Marco Fabbri, Maria Bigoni
We investigate the impact of a significant property rights reform on distributional preferences in rural Beninese villages. This reform replaced the informal use-rights over land, which were traditionally prevalent, with a system resembling private ownership. Our study employs a combination of a randomized controlled trial implementation of the reform across villages and lab-in-the-field experiments to elicit the distributional choices of villagers. We examine participants’ preferences in situations where inequality arises from luck as well as situations where inequality is based on merit considerations. The findings reveal that the reform, which aligns allocation rules with impersonal market-like institutions, enhances participants’ acceptance of luck-based inequality. However, we find no discernible effect of the reform on participants’ tolerance for merit-based inequality. These results contribute to our understanding of the impact of institutional changes on distributional preferences and have implications for the design of economic systems.
Event: World Bank Land Conference 2024 - Washington
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