Inequality, life expectancy, and the intragenerational redistribution puzzle: Some experimental evidence

Tim Krieger, Christine Meemann and Stefan Traub

No 2022-02, Discussion Paper Series from University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy

Abstract: In most OECD countries, pension reform policy has decreased the level of intragenerational redistribution over the last three decades, that is, redistribution among members of the same generation with high and low pension entitlements. This trend has occurred despite heterogeneity in life expectancy linked to socioeconomic status having a regressive impact on outcomes. This paper contributes to solving this puzzle by means of a controlled laboratory experiment. We study the causal relationship between inequality of entitlements, mortality risk, and the size of redistribution in a stylized social security system. We find that mortality risk, when negatively correlated with entitlements, significantly lowers subjects' willingness to redistribute payoffs from high-entitlement to low-entitlement subjects. We explain this finding with efficiency preferences and an alienation effect. The alienation effect is the tendency to attach a lower social weight to the short-lived poor.

Keywords: Inequality; Life Expectancy; Risk; Redistribution; Pension Reform; Efficiency Preferences; Alienation Effect; Experiment (search for similar items in EconPapers)
JEL-codes: D63 D81 H55 I14 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-age, nep-exp and nep-hea
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Related works:
Working Paper: Inequality, Life Expectancy, and the Intragenerational Redistribution Puzzle - Some Experimental Evidence (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wgspdp:202202

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