Measuring Future Grandparents' Preferences for Equality and Relative Standing

Peer Reviewed
1 January 2002

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

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Publication | 1 April 2002