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Inequality Aversion versus Risk Aversion

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  • Yoram Kroll

    (Hebrew University, Jerusalem)

  • Liema Davidovitz

    (Hebrew University, Jerusalem)

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    Abstract

    Inequality aversion and risk--aversion are widely assumed in economic models; however existing economic literature fails to distinguish between the two. This paper presents methodology and a laboratory experiment, which separates inequality aversion from risk aversion. In a set of laboratory experiments, subjects had to choose between two risky alternatives which pay meaningful prizes with the same individual risk but different levels of egalitarianism. Thus, the choice of the more egalitarian alternative implies a higher level of inequality aversion. The experiment was conducted among children, some of whom live on a communal system (kibbutz) and some in the city. Copyright The London School of Economics and Political Science 2003

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    Bibliographic Info

    Article provided by London School of Economics and Political Science in its journal Economica.

    Volume (Year): 70 (2003)
    Issue (Month): 277 (February)
    Pages: 19-29

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    Handle: RePEc:bla:econom:v:70:y:2003:i:277:p:19-29

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    Cited by:
    1. Astrid Gamba & Elena Manzoni, 2014. "Social comparison and risk taking behavior," Jena Economic Research Papers 2014-001, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
    2. Margaret Meyer & Bruno Strulovici, 2013. "The Supermodular Stochastic Ordering," Economics Series Working Papers 655, University of Oxford, Department of Economics.
    3. Andrew E. Clark & Conchita D'Ambrosio, 2014. "Attitudes to Income Inequality: Experimental and Survey Evidence," PSE Working Papers halshs-00967938, HAL.
    4. Jukka Pirttilä & Roope Uusitalo, 2007. "Leaky Bucket in the Real World: Estimating Inequality Aversion Using Survey Data," CESifo Working Paper Series 2026, CESifo Group Munich.
    5. Brennan, Geoffrey & González, Luis G. & Güth, Werner & Levati, M. Vittoria, 2008. "Attitudes toward private and collective risk in individual and strategic choice situations," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 253-262, July.
    6. Traub, Stefan & Seidl, Christian & Schmidt, Ulrich, 2009. "An experimental study on individual choice, social welfare, and social preferences," European Economic Review, Elsevier, vol. 53(4), pages 385-400, May.
    7. Brice Magdalou & Dimitri Dubois & Phu Nguyen-Van, 2009. "Risk and Inequality Aversion in Social Dilemmas," Working Papers 09-02, LAMETA, Universtiy of Montpellier, revised Mar 2009.
    8. Alexia Gaudeul, 2013. "Social preferences under uncertainty," Jena Economic Research Papers 2013-024, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
    9. Davidovich, Liema & Heilbrunn, Sibylle & Polovin, Avraham, 2009. "The Impact of Change in the Kibbutz on Risk- Taking of Entrepreneurs," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 37(2).
    10. Krawczyk, Michał, 2012. "Incentives and timing in relative performance judgments: A field experiment," Journal of Economic Psychology, Elsevier, vol. 33(6), pages 1240-1246.
    11. Ingrid Rohde & Kirsten Rohde, 2011. "Risk attitudes in a social context," Journal of Risk and Uncertainty, Springer, vol. 43(3), pages 205-225, December.
    12. Ferrer-i-Carbonell, Ada & Ramos, Xavi, 2010. "Inequality Aversion and Risk Attitudes," IZA Discussion Papers 4703, Institute for the Study of Labor (IZA).
    13. Takashi Oshio & Miki Kobayashi, 2011. "Area-Level Income Inequality and Individual Happiness: Evidence from Japan," Journal of Happiness Studies, Springer, vol. 12(4), pages 633-649, August.

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