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Inequality and Risk Aversion in Health and Income: An Empirical Analysis Using Hypothetical Scenarios with Losses


  • Ignacio Abásolo

    () (Departamento de Economía de las Instituciones, Estadística Económica y Econometría, Facultad de Ciencias Económicas y Empresariales. Universidad de La Laguna, Spain)

  • Aki Tsuchiya

    () (Department of Economics, The University of Sheffield)


Four kinds of distributional preferences are explored: inequality aversion in health, inequality aversion in income, risk aversion in health, and risk aversion in income. Face to face interviews of a representative sample of the general public are undertaken using hypothetical scenarios involving losses in either health or income. Whilst in health risk aversion is stronger than inequality aversion, in the income context we cannot reject that attitudes to inequality aversion and risk aversion are the same. When we compare across contexts we find that inequality aversion and risk aversion are both stronger in income than they each are in health.

Suggested Citation

  • Ignacio Abásolo & Aki Tsuchiya, 2013. "Inequality and Risk Aversion in Health and Income: An Empirical Analysis Using Hypothetical Scenarios with Losses," Working Papers 2013005, The University of Sheffield, Department of Economics.
  • Handle: RePEc:shf:wpaper:2013005

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    References listed on IDEAS

    1. Ada Ferrer-i-Carbonell & Xavier Ramos, 2010. "Inequality Aversion and Risk Attitudes," SOEPpapers on Multidisciplinary Panel Data Research 271, DIW Berlin, The German Socio-Economic Panel (SOEP).
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    3. Yoram Kroll & Liema Davidovitz, 2003. "Inequality Aversion versus Risk Aversion," Economica, London School of Economics and Political Science, vol. 70(277), pages 19-29, February.
    4. Wagstaff, Adam, 2002. "Inequality aversion, health inequalities and health achievement," Journal of Health Economics, Elsevier, vol. 21(4), pages 627-641, July.
    5. A. B. Atkinson & F. Bourguignon, 1982. "The Comparison of Multi-Dimensioned Distributions of Economic Status," Review of Economic Studies, Oxford University Press, vol. 49(2), pages 183-201.
    6. Abasolo, Ignacio & Tsuchiya, Aki, 2004. "Exploring social welfare functions and violation of monotonicity: an example from inequalities in health," Journal of Health Economics, Elsevier, vol. 23(2), pages 313-329, March.
    7. Fredrik Carlsson & Dinky Daruvala & Olof Johansson-Stenman, 2005. "Are People Inequality-Averse, or Just Risk-Averse?," Economica, London School of Economics and Political Science, vol. 72(3), pages 375-396, August.
    8. Luciana Echazu & Diego Nocetti, 2013. "Priority Setting In Health Care: Disentangling Risk Aversion From Inequality Aversion," Health Economics, John Wiley & Sons, Ltd., vol. 22(6), pages 730-740, June.
    9. Amiel,Yoram & Cowell,Frank, 1999. "Thinking about Inequality," Cambridge Books, Cambridge University Press, number 9780521466967, March.
    10. Peter A. Diamond, 1967. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparison of Utility: Comment," Journal of Political Economy, University of Chicago Press, vol. 75, pages 765-765.
    11. Yoram Amiel & Frank Cowell & Wulf Gaertner, 2012. "Distributional orderings: an approach with seven flavors," Theory and Decision, Springer, vol. 73(3), pages 381-399, September.
    12. Abasolo, Ignacio & Tsuchiya, Aki, 2004. "Exploring social welfare functions and violation of monotonicity: an example from inequalities in health--a reply to Jan Abel Olsen," Journal of Health Economics, Elsevier, vol. 23(2), pages 333-334, March.
    13. Tobin, James, 1970. "On Limiting the Domain of Inequality," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 263-277, October.
    14. Ignacio Abasolo & Aki Tsuchiya, 2008. "Understanding preference for egalitarian policies in health: are age and sex determinants?," Applied Economics, Taylor & Francis Journals, vol. 40(19), pages 2451-2461.
    15. Schwarze, Johannes & Harpfer, Marco, 2007. "Are people inequality averse, and do they prefer redistribution by the state?: Evidence from German longitudinal data on life satisfaction," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(2), pages 233-249, April.
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    Cited by:

    1. Alexia Gaudeul, 2013. "Social preferences under uncertainty," Jena Economic Research Papers 2013-024, Friedrich-Schiller-University Jena.

    More about this item


    inequality; risk aversion; health; income;

    JEL classification:

    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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