Evaluating Real World Income Distributions behind the Veil of Ignorance - How Risk Averse do You have to be to Prefer Europe over the US?

Tasneem Zafar () and Alfons Weichenrieder

No 572, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: The paper uses a veil of ignorance approach and income distribution data of developed countries to arrive at inequality corrected income rankings. While a risk neutral individual (based on year 2000 data) would have preferred to be born into the US rather than any European country in our sample except Luxembourg, a coefficient of relative risk aversion of 2 suffices to make several European countries look preferable. The paper also sheds light on the risk corrected average income on a gender basis and scans for times of diminished expectations, i.e. periods where the expected utility of being born into a country has reduced over time.

Keywords: Income distribution; veil of ignorance; cross country comparison (search for similar items in EconPapers)
JEL-codes: D31 H23 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2011-11
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Published in CESifo Working Paper Series, No. 3632, Category 1: Public Finance (2011)

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Working Paper: Evaluating Real World Income Distributions behind the Veil of Ignorance - How Risk Averse do you have to be to Prefer Europe over the US? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:lis:liswps:572

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