| By: |
Bergolo, Marcelo (IECON, Universidad de la República);
Burdin, Gabriel (Leeds University Business School);
Burone, Santiago (University of Antwerp);
De Rosa, Mauricio (Universidad de la República, Uruguay);
Giaccobasso, Matias (University of California, Los Angeles);
Leites, Martin (Universidad de la República, Uruguay) |
| Abstract: |
Although different approaches and methods have been used to measure inequality
aversion, there remains no consensus about its drivers at the individual
level. We conducted an experiment on a sample of more than 1800 first-year
undergraduate economics and business students in Uruguay to understand why
people are inequality averse. We elicited inequality aversion by asking
participants to make a sequence of choices between hypothetical societies
characterized by varying levels of average income and income inequality. In
addition, we use randomized information treatments to prime participants into
competing narratives regarding the sources of inequality in society. The main
findings are that (1) the prevalence of inequality aversion is high: most
participants' choices revealed inequality-averse preferences; (2) the extent
of inequality aversion depends on the individual's position in the income
distribution; (3) individuals are more likely to accept inequality when it
comes from effort rather than luck regardless of their income position; (4)
the effect of social mobility on inequality aversion is conditional on
individual's income position: preferences for mobility reduces inequality
aversion for individuals located at the bottom of the income distribution,
where risk aversion cannot play any role. |
| Keywords: |
inequality aversion, fairness, risk, effort, luck, redistribution, questionnaire-experiments |
| JEL: |
D63 D64 D81 C13 C91 |
| Date: |
2021–11 |
| URL: |
http://d.repec.org/n?u=RePEc:iza:izadps:dp14828&r= |