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Measuring Hypothetical Grandparents Preferences For Equality And Relative Standings

  • Johansson-Stenman, Olof

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Carlsson, Fredrik

    ()

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Daruvala, Dinky

    ()

    (Department of Economics)

Individuals’ aversion to risk and inequality, and their concern for relative standing, are measured through experimental choices between hypothetical societies. It is found that on average individuals are both fairly inequality-averse and have a strong concern for relative income. The results are used to illustrate welfare consequences based on a utilitarian SWF and a modified CRRA utility function. It is shown that the social marginal utility of income may then become negative, even at income levels that are far from extreme.

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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 42.

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Length: 41 pages
Date of creation: 23 May 2001
Date of revision:
Publication status: Published in Economic Journal, 2002, pages 362-383.
Handle: RePEc:hhs:gunwpe:0042
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/

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