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.
Files and links
Request a publication
Due to Copyright we cannot publish this article but you are very welcome to request a copy from the author. Please just fill in the information beneath.