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Equity judgments and context dependence: Knowledge, efficiency and incentives

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  • Schilizzi, Steven

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.

Suggested Citation

  • Schilizzi, Steven, 2011. "Equity judgments and context dependence: Knowledge, efficiency and incentives," Working Papers 100887, University of Western Australia, School of Agricultural and Resource Economics.
  • Handle: RePEc:ags:uwauwp:100887
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    File URL: http://purl.umn.edu/100887
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    References listed on IDEAS

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    1. Francisco Alpizar & Fredrik Carlsson & Olof Johansson-Stenman, 2008. "Does context matter more for hypothetical than for actual contributions? Evidence from a natural field experiment," Experimental Economics, Springer;Economic Science Association, vol. 11(3), pages 299-314, September.
    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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    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;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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