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Measuring tastes for equity and aggregate wealth behind the veil of ignorance

Jan (J.P.M.) Heufer (), Jason Shachat () and Yan Xu ()
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Jan (J.P.M.) Heufer: Erasmus University Rotterdam, Erasmus School of Economics
Yan Xu: Erasmus University Rotterdam, Erasmus School of Economics

No 18-087/I, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We propose an instrument to measure individuals' social preferences regarding equity and efficiency behind a veil of ignorance. We pair portfolio and wealth distribution choice problems which have a common budget set. For a given bundle, the distribution over an individual's wealth is the same for both problems. The portfolio choice serves as a benchmark to evaluate whether the wealth distribution choice exhibits equity or efficiency preferring tastes. We report experiments using a within-subject design testing the veracity of this instrument. We find clusters of equity preferring, efficiency preferring, and socially agnostic individuals through reduced form, revealed preference, and structural estimation analyses.

Keywords: Inequity aversion; revealed preference; risk preferences; social preferences; veil of ignorance (search for similar items in EconPapers)
JEL-codes: C14 C91 D11 D12 D63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-upt
Date: 2018-11-16
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