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Research Institute of Industrial Economics (IFN) Working Paper Series

No 476:
Social Norms and Economic Incentives in the Welfare State

Assar Lindbeck (), Sten Nyberg and Jörgen W. Weibull

Abstract: This paper analyzes the interplay between social norms and economic incentives in the context of work decisions in the modern welfare state. We assume that to live off one's own work is a social norm, and that the larger the population fraction adhering to this norm, the more intensely it is felt by the individual. Individuals face two choices, one economic, whether to work or live off public transfers, and one political, how large the transfer should be. The model highlights certain factors determining the size of the welfare state.

Keywords: Welfare Economics; Decision Making; Incentives; (follow links to similar papers)

JEL-Codes: D60; D81; O31; (follow links to similar papers)

27 pages, May 1997

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