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

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  • Johannes Schwarze
  • Marco Härpfer

Abstract

We link life-satisfaction data to inequality of the pre- and post-government income distribution at the regional level, to estimate the degree of inequality aversion. Three different inequality measures are used. In addition, we investigate whether a reduction in inequality by the state increases individual well-being. We find only weak evidence that Germans are inequality averse. Inequality reduction by the state does not increase well being. On the contrary, inequality reduction imposes an excess burden on middle-income earners. The paper uses data from the German Socio-economic Panel Study (GSOEP) from 1985 to 1998.

Suggested Citation

  • Johannes Schwarze & Marco Härpfer, 2004. "Are People Inequality Averse, and Do They Prefer Redistribution by the State?: Evidence from German Longitudinal Data on Life Satisfaction ; A Revised Version," Discussion Papers of DIW Berlin 407, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp407
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    More about this item

    Keywords

    Inequality aversion; Redistribution; Life satisfaction; Panel data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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