Inequality aversion and risk aversion

Christopher Chambers

Journal of Economic Theory, 2012, vol. 147, issue 4, 1642-1651

Abstract: This note shows that for two social welfare functions which are inequality averse with respect to certainty equivalents, if one is more inequality averse for certainty equivalents than the other, the household preference induced by optimally allocating aggregate bundles according to this social welfare function is more risk averse than the other. We present examples showing that this comparative static can be reversed if absolute inequality aversion is dropped. We show that the utilitarian rule always induces the least risk averse household preference among all social welfare functions (this corresponds to the sum of certainty equivalents).

Keywords: Risk aversion; Inequality aversion; Aggregation (search for similar items in EconPapers)
JEL-codes: D60 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:147:y:2012:i:4:p:1642-1651

DOI: 10.1016/j.jet.2010.10.016

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