2005/07/19 by Fredrik Carlsson, Dinky Daruvala, Olof Johansson‐Stenman · 34 citations
Decision Sciences · Economics, Econometrics and Finance · Mathematics · Social Sciences · #Decision-Making and Behavioral Economics #Demographic economics #Economic inequality #Economic theories and models #Economics #Expected utility hypothesis #Experimental Behavioral Economics Studies #Inequality #Inequity aversion #Mathematical economics #Mathematics #Microeconomics #Public economics #Risk aversion (psychology) #Welfare
paper · open access · doi:10.1111/j.0013-0427.2005.00421.x
published in Economica 72(287), 375-396 (Wiley)
openalex publication_date 2005/07/19 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/15
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.