Governments use expenditures extensively as redistributive devices. Examples include the public provision of health, education, welfare, and public pensions. The authors' purpose is to investigate the normative rationale for such policies. In particular, they study the role of government...

<link rid="b14">Rochet (1991)</link> showed that with distortionary income taxes, social insurance is a desirable redistributive device when risk and ability are negatively correlated. This finding is re-examined when "ex post" moral hazard and adverse selection are included, and under different informational...