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Equity judgments and context dependence: Knowledge, efficiency and incentives

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  • Schilizzi, Steven
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    Abstract

    Distributional equity concerns are often at least as important as economic efficiency and ecological sustainability in environmental and natural resource management policies. Until recently, however, economists have shied away from tackling equity issues, primarily because equity appeared as a slippery concept, varying across people and circumstances. This study takes this context-dependence of equity judgments as a starting point and shows that such dependence, far from being random, is systematic. A series of controlled laboratory treatments with University students were designed to investigate the role on distributional equity judgments of such context factors as knowledge of one’s position in society, how the existence of equity-efficiency tradeoffs can affect equity judgments, and the importance of material incentives compared with hypothetical situations, where ‘in principle’ judgments are called for. Key results include the relative discriminating power of context factors, the hierarchy of context-dependence, the dissymmetry between support and opposition to equity principles, and the impact of different wealth endowments on equity judgments. A number of common beliefs are found not to be substantiated by our experimental findings.

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    File URL: http://purl.umn.edu/100887
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    Bibliographic Info

    Paper provided by University of Western Australia, School of Agricultural and Resource Economics in its series Working Papers with number 100887.

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    Date of creation: 23 Feb 2011
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    Handle: RePEc:ags:uwauwp:100887

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    Keywords: Equity; fairness; resource allocation; environmental policy; experimental economics; welfare economics; public choice; Institutional and Behavioral Economics; Public Economics; C92; D03; D63; H23; Q56; Q58;

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    1. Alpizar, Francisco & Carlsson, Fredrik & Johansson-Stenman, Olof, 2007. "Does context matter more for hypothetical than for actual contributions? Evidence from a natural field experiment," Working Papers in Economics 251, University of Gothenburg, Department of Economics.
    2. Johansson-Stenman, Olof & Konow, James, 2009. "Fairness Concerns in Environmental Economics - Do They Really Matter and If So How?," Working Papers in Economics 398, University of Gothenburg, Department of Economics.
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