Are People Inequality-Averse, or Just Risk-Averse?
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TLDR
In this article, individual preferences for risk and inequality are measured through choices between imagined societies and lotteries, and the median relative risk aversion, which is often seen to reflect social inequality aversion, is between 2 and 3.Abstract:
Individuals’ preferences for risk and inequality are measured through choices between imagined societies and lotteries. The median relative risk aversion, which is often seen to reflect social inequality aversion, is between 2 and 3. Most people are also found to be individually inequality-averse, reflecting a willingness to pay for living in a more equal society. Left-wing voters and women are both more risk and inequality-averse than others. The model allows for non-monotonic SWFs, implying that welfare may decrease with an individual’s income at high-income levels, which is illustrated in simulations based on the empirical results.read more
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Journal ArticleDOI
ERC: A Theory of Equity, Reciprocity, and Competition
Gary E. Bolton,Axel Ockenfels +1 more
TL;DR: The authors demonstrate that people are motivated by both their pecuniary payoff and their relative payoff standing, and demonstrate that a simple model, constructed on the premise that people were motivated by either their payoff or their relative standing, organizes a large and seemingly disparate set of laboratory observations as one consistent pattern, which explains observations from games where equity is thought to be a factor, such as ultimatum and dictator, games where reciprocity is played a role and games where competitive behavior is observed.
Journal ArticleDOI
Explaining the characteristics of the power (CRRA) utility family.
TL;DR: The power family, also known as the family of constant relative risk aversion (CRRA), is the most widely used parametric family for fitting utility functions to data and its characteristics have been little understood, and have led to numerous misunderstandings.
Journal ArticleDOI
A ‘Leaky Bucket’ in the Real World: Estimating Inequality Aversion using Survey Data
Jukka Pirttilä,Roope Uusitalo +1 more
TL;DR: The authors found that inequality aversion can be measured in a meaningful way using survey data, but the magnitudes of the estimates depend dramatically on how inequality aversion is measured and no matter how measured, the revealed inequality aversion predicts opinions on a wide range of questions related to the welfare state, such as the level of taxation, tax progressivity and the structure of unemployment benefits.
Journal ArticleDOI
A lower bound to the social cost of CO2 emissions.
TL;DR: In this article, the authors evaluate past estimates of the social cost of carbon and calculate a lower bound, showing that the dominant values of these values are gross underestimates and suggest that climate policy should be more stringent than previously proposed.
Journal ArticleDOI
Attitudes toward private and collective risk in individual and strategic choice situations
TL;DR: The authors explored idiosyncratic attitudes toward own and others' risk in an experiment involving choices with and without strategic interaction, and found no relation between risk attitudes and other-regarding concerns.
References
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Daniel Kahneman,Amos Tversky +1 more
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Daniel Kahneman,Amos Tversky +1 more
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A theory of fairness, competition and cooperation
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TL;DR: This paper showed that if some people care about equity, the puzzles can be resolved and that the economic environment determines whether the fair types or the selesh types dominate equilibrium behavior in cooperative games.
Journal ArticleDOI
ERC: A Theory of Equity, Reciprocity, and Competition
Gary E. Bolton,Axel Ockenfels +1 more
TL;DR: The authors demonstrate that people are motivated by both their pecuniary payoff and their relative payoff standing, and demonstrate that a simple model, constructed on the premise that people were motivated by either their payoff or their relative standing, organizes a large and seemingly disparate set of laboratory observations as one consistent pattern, which explains observations from games where equity is thought to be a factor, such as ultimatum and dictator, games where reciprocity is played a role and games where competitive behavior is observed.