How Much Does Responsibility Matter in Fairness Measurement?

Laurence Jacquet, Zhiyang Jia and Thor Olav Thoresen

No 12418, CESifo Working Paper Series from CESifo

Abstract: Empirical evidence suggests that social acceptance of redistribution depends on whether income differences result from preferences (of which individuals are responsible) or from circumstances. We propose a new empirical method that measures the importance of preferences in the distribution of welfare in the context of tax reforms. We compare two types of Compensating Variation: the standard CV and a new one (CVcirc), which is computed assuming that individuals differ only in circumstances. To obtain these metrics, we first estimate a structural job choice model that allows us to take the preferences/circumstances dyad into account. We then use the estimated parameters to compute our two metrics, leveraging a tax reform and applying a simulation approach à la McFadden (1999). Implementing our method with Norwegian data, we find that both welfare metrics display a very similar distribution, except at the very top of the households’ income distribution, suggesting this is where responsibility matters.

Keywords: money metric utility; fairness; tax reform; structural labor supply model (search for similar items in EconPapers)
JEL-codes: C25 H31 I31 J22 (search for similar items in EconPapers)
Date: 2026
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