Inequality Aversion and Risk Attitudes

Ada Ferrer-i-Carbonell and Xavi Ramos ()

No 271, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

Abstract: Using self reported measures of life satisfaction and risk attitudes, we empirically test whether there is a relationship between individuals inequality and risk aversion. The empirical analysis uses the German SOEP household panel for the years 1997 to 2007 to conclude that the negative effect of inequality measured by the sample gini coefficient by year and federal state is larger for those individuals who report to be less willing to take risks. Nevertheless, the empirical results suggest that even though inequality and risk aversion are related, they are not the same thing. The paper shows that the relationship between risk attitudes and inequality aversion survives the inclusion of individual characteristics (i.e. income, education, and gender) that may be correlated with both risk attitudes and inequality aversion.

Keywords: Happiness; inequality aversion; risk attitudes; well-being (search for similar items in EconPapers)
JEL-codes: D3 D63 I31 (search for similar items in EconPapers)
Pages: 27 p.
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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Related works:
Working Paper: Inequality Aversion and Risk Attitudes (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwsop:diw_sp271

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