Robin Hood Effect on Real Estate Valuation

The Robin Hood effect gets its name from the Anglo-Saxon folkloric outlaw Robin Hood, who according to legend, stole from rich to give to the poor

Robin Hood Effect

It is an economic occurrence where income is redistributed so that economic inequality is reduced

Government collects higher taxes from the rich and lower or no taxes from the poor, and then uses that tax revenue to provide services for the poor, creates a Robin Hood effect

Causes of Robin Hood effect

1) market base phenomenon
2) government economic policies
3) government fiscal policies
4) government tax policies
5) changing market conditions
6) formation of labor unions

when the redistribution is in favour of lower-income people, ie Robin Hood effect

It makes lower-income people better off and it always makes at least some higher-income people worse of

Higher road tax for bigger engine automobiles

Construction of a high-density affordable housing complex next door to a large mansion could make the new lower-income residents better off, while imposing costs on the higher-income residents of the mansion via increased noise and congestion

Due to formation of labor unions, that increase the bargaining power of workers, benefiting them at the expenses of 4th Eur employes

Objectives of Income and Wealth Redistribution

1) to rectify inequality

2) increase economic stability

3) increase opportunity for the less wealthy members of society

4) funding for public services

5) concept of distributive justice

6) larger middle class benefits the overall economy by increasing purchasing power

7) providing equal opportunities for individuals to reach a better standard of living

8) capitalism creates an unequal wealth distribution

Impact of Robin Hood effect on Macroeconomic policies

1) conducting deficit spending during recessions

2) running government budget surpluses during economic expansions

3) increasing taxes to control irrational exuberance in investment

4) avoid an overheated financial sector during economic expansions

5) tax relief to lower-income people during recessions

6) taxes on investments by people with higher-income during economic expansions

Economic Inequality

It refers to the disparities in income and wealth among individuals in a society

Capitalism

It is an economic system whereby monetary goods are owned by individuals or companies

The purest form of capitalism is free market where individuals are unrestrained in determining where to invest, what to produce, and at which price to exchange goods and services

Fiscal Policy

Fiscal policy uses government spending and tax policies to influence macroeconomic conditions, including aggregate demand, employment and inflation

Pigou Effect

It is a term in economics referring to the relationship between consumption, wealth, employment and output during periods of deflation

Rooting Out the Robin Hood Effect

When given the chance, people will sacrifice their own incomes to punish the rich and help the poor

It shows that we harness our inner Robin Hoods to promote egalitarian – although our motives are not always pure

Egalitarianism

The doctrine that all people are equal and deserve equal rights and opportunities

Impact of Robin Hood Effect in Cities

1) The growth of economic inequality has raised concern and attention in recent years

2) in cities these inequalities are embedded in space

3) entangled processes which include location choices of households and businesses, daily mobility, segregation and closure attitude, central planning or global economic restructuring

4) joint actions have given rise to segregated cities

5) characterized by uneven distributions of capital among their neighborhoods

6) intensity of socioeconomic inequalities vary from one city to another

7) the neighborhood impacts the life trajectories of the residents

8) people produce data when moving and their travel decisions are partly guided by the data produced by others

9) developing economic activities in disadvantaged regions indirectly benefits the surrounding populations, by fostering job opportunities, transport facilities and increased safety

10) 15% to 20% of the individuals daily travels, such trip virtually move money from one part of city to another and directly contribute the shape of spatial distribution of wealth across neibhourhoods

11) large metropolitan areas are characterized by mixed land use in many of their neibhourhoods

12) bank card payment is increased in cities

13) most individuals perform their shopping trips near their residence

14) the addition of small changes in the shopping destinations of individuals can dramatically impact the spatial distribution of money flows in the city

15) individuals first choose their casual shopping destinations with regard of transport facilities and travel time budget

Summary of Robin Hood Principle

Cosmopolitan prioritarianism- An ethical rule that says we should think of everyone in the world in the same way, no matter where they live, and then focus help where it helps the most those who have less have priority over those who have more Corona virus pandemic effect will teach us Robin Hood principle very well.

Compiled by

Vr. Avinash Kulkarni