Are People Inequality Averse, and Do They Prefer Redistribution by the State?: Evidence from German Longitudinal Data on Life Satisfaction

Johannes Schwarze and Marco Härpfer

No 285, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: We link life-satisfaction data to inequality of the pre-government income distribution at the regional level, to estimate the degree of inequality aversion. In addition, we investigate whether a reduction in inequality by the state increases individual well-being. We find that Germans are inequality averse over the entire income distribution. However, inequality reduction by the state does not increase well-being. On the contrary, inequality reduction places something of an excess burden on middle-income earners. The paper uses data from the German Socio-economic Panel Study (GSOEP) from 1985 to 1998.

Keywords: Inequality aversion; redistribution; life satisfaction; panel data (search for similar items in EconPapers)
JEL-codes: C23 D31 D63 I31 (search for similar items in EconPapers)
Pages: 28 p.
Date: 2002
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Citations: View citations in EconPapers (3)

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