MEASURING HYPOTHETICAL GRANDPARENTS PREFERENCES FOR EQUALITY AND RELATIVE STANDINGS

Olof Johansson-Stenman (olof.johansson@economics.gu.se), Fredrik Carlsson and Dinky Daruvala (dinky.daruvala@kau.se)
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Dinky Daruvala: Department of Economics, Postal: University of Karlstad, 651 88 Karlstad,

No 42, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: Individuals’ aversion to risk and inequality, and their concern for relative standing, are measured through experimental choices between hypothetical societies. It is found that on average individuals are both fairly inequality-averse and have a strong concern for relative income. The results are used to illustrate welfare consequences based on a utilitarian SWF and a modified CRRA utility function. It is shown that the social marginal utility of income may then become negative, even at income levels that are far from extreme.

Keywords: Well-being; Veil of ignorance; distributional considerations; welfare theory (search for similar items in EconPapers)
JEL-codes: C91 D63 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2001-05-23
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Citations: View citations in EconPapers (13)

Published in Economic Journal, 2002, pages 362-383.

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