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2002-04-01 | Peer Reviewed

Measuring Future Grandparents' Preferences for Equality and Relative Standing

Carlsson, Fredrik, Olof Johansson-Stenman and Dinky Daruvala. 2002. “Measuring Future Grandparents' Preferences for Equality and Relative Standing.” Economic Journal 112: 362-383. 112: 362-383.
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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.

Co-author:

Dinky Daruvala