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An Experimental Test of Preferences for the Distribution of Income and Individual Risk Aversion

Author

Listed:
  • John H. Beck

    (Gonzaga University)

Abstract

This study investigates the question of how much income redistribution individuals desire in a society with random differences in individual incomes. The experiments confronted individuals with choices of lotteries determining their own payoffs--to measure individual risk aversion--and with choices of lotteries determining payoffs to everyone in the group--to measure preferences regarding the distribution of income. The subjects were risk averse, but they did not display the extreme risk aversion implied by a Rawlsian maximin rule. The experiments produced little evidence that individuals favor a more equal income distribution than can be explained by individual risk aversion.

Suggested Citation

  • John H. Beck, 1994. "An Experimental Test of Preferences for the Distribution of Income and Individual Risk Aversion," Eastern Economic Journal, Eastern Economic Association, vol. 20(2), pages 131-145, Spring.
  • Handle: RePEc:eej:eeconj:v:20:y:1994:i:2:p:131-145
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume20/V20N2P131_145.pdf
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    Citations

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    Cited by:

    1. Tamás Csermely & Alexander Rabas, 2016. "How to reveal people’s preferences: Comparing time consistency and predictive power of multiple price list risk elicitation methods," Journal of Risk and Uncertainty, Springer, vol. 53(2), pages 107-136, December.
    2. Ilja Neustadt & Peter Zweifel, 2010. "Is the Welfare State Sustainable? Experimental Evidence on Citizens’ Preferences for Redistribution," SOI - Working Papers 1003, Socioeconomic Institute - University of Zurich.
    3. Thomas Hammerschmidt & Hans-Peter Zeitler & Reiner Leidl, 2004. "A utility-theoretic approach to the aggregation of willingness to pay measured in decomposed scenarios: development and empirical test," Health Economics, John Wiley & Sons, Ltd., vol. 13(4), pages 345-361.
    4. Ruben Durante & Louis Putterman & Joël Weele, 2014. "Preferences For Redistribution And Perception Of Fairness: An Experimental Study," Journal of the European Economic Association, European Economic Association, vol. 12(4), pages 1059-1086, August.
    5. Ekaterina Selezneva & Philippe Van Kerm, 2016. "A distribution-sensitive examination of the gender wage gap in Germany," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(1), pages 21-40, March.
    6. Becchetti, Leonardo & Castriota, Stefano & Conzo, Pierluigi, 2017. "Disaster, Aid, and Preferences: The Long-run Impact of the Tsunami on Giving in Sri Lanka," World Development, Elsevier, vol. 94(C), pages 157-173.
    7. Christiane Bradler, 2009. "Social Preferences under Risk - An Experimental Analysis," Jena Economic Research Papers 2009-022, Friedrich-Schiller-University Jena.
    8. Steffen Andersen & Glenn Harrison & Morten Lau & E. Rutström, 2009. "Elicitation using multiple price list formats," Experimental Economics, Springer;Economic Science Association, vol. 12(3), pages 365-366, September.
    9. Elabed, Ghada & Carter, Michael R., 2015. "Compound-risk aversion, ambiguity and the willingness to pay for microinsurance," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 150-166.
    10. repec:eee:pubeco:v:153:y:2017:i:c:p:49-55 is not listed on IDEAS
    11. Pfarr Christian & Ulrich Volker, 2011. "Discrete-Choice-Experimente zur Ermittlung der Präferenzen für Umverteilung," Review of Economics, De Gruyter, vol. 62(3), pages 232-262, December.
    12. Rutstrom, E. Elisabet & Williams, Melonie B., 2000. "Entitlements and fairness:: an experimental study of distributive preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 43(1), pages 75-89, September.
    13. Harold Hochman, 1996. "Public choice interpretations of distributional preference," Constitutional Political Economy, Springer, vol. 7(1), pages 3-20, March.
    14. Roland Vaubel, 2012. "Redistribution as income insurance?," Public Choice, Springer, vol. 152(3), pages 389-392, September.
    15. Neustadt, Ilja & Zweifel, Peter, 2011. "Income redistribution: how to divide the pie?," MPRA Paper 35427, University Library of Munich, Germany.

    More about this item

    Keywords

    Distribution; Income; Redistribution;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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