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Choices in egalitarian distribution: inequality aversion versus risk aversion

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  • Kroll, Yoram
  • Davidovitz, Leima

Abstract

Inequality aversion and risk aversion are widely assumed features of economic models. But a review of the literature revealed that inequlity aversion and risk aversion are treated as separate variables. This paper presents exploratory research designed to separate inequality aversion from risk aversion. In a set of laboratory experiments, subjects chose between two alternatives with the same individuals risk, but different levels of egalitarianism. Thus, the choice of the more egalitarian alternative with constant risk level implies a higher level of inequality aversion. The experiment was conducted among 211 eight-year-old children, 107 of whom live on Kibbutz and 104 in the city. We found not significant difference between Kibbutz children and city children in inequality aversion.

Suggested Citation

  • Kroll, Yoram & Davidovitz, Leima, 1999. "Choices in egalitarian distribution: inequality aversion versus risk aversion," LSE Research Online Documents on Economics 6582, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:6582
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    File URL: http://eprints.lse.ac.uk/6582/
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    References listed on IDEAS

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    1. Amiel,Yoram & Cowell,Frank, 1999. "Thinking about Inequality," Cambridge Books, Cambridge University Press, number 9780521466967, March.
    2. G. Hanoch & H. Levy, 1969. "The Efficiency Analysis of Choices Involving Risk," Review of Economic Studies, Oxford University Press, vol. 36(3), pages 335-346.
    3. Baigent, Nick & Gaertner, Wulf, 1996. "Never Choose the Uniquely Largest: A Characterization," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 239-249, August.
    4. Amiel, Yoram & Cowell, Frank A., 1992. "Measurement of income inequality : Experimental test by questionnaire," Journal of Public Economics, Elsevier, vol. 47(1), pages 3-26, February.
    5. Kroll, Yoram & Levy, Haim & Rapoport, Amnon, 1988. "Experimental Tests of the Separation Theorem and the Capital Asset Pricing Model," American Economic Review, American Economic Association, vol. 78(3), pages 500-519, June.
    6. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    7. Kachelmeier, Steven J & Shehata, Mohamed, 1992. "Examining Risk Preferences under High Monetary Incentives: Experimental Evidence from the People's Republic of China," American Economic Review, American Economic Association, vol. 82(5), pages 1120-1141, December.
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    More about this item

    Keywords

    Inequality; income distribution; risk; experiments;

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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