Are People Inequality Averse, and Do They Prefer Redistribution by the State? Evidence from German Longitudinal Data on Life Satisfaction
30 Pages Posted: 15 Feb 2002
Date Written: February 2002
Abstract
We link life-satisfaction data to inequality of the pre-government income distribution at the regional level, to estimate the degree of inequality aversion. In addition, we investigate whether a reduction in inequality by the state increases individual well-being. We find that Germans are inequality averse over the entire income distribution. However, inequality reduction by the state does not increase well-being. On the contrary, inequality reduction places something of an excess burden on middle-income earners. The paper uses data from the German Socio-economic Panel Study (GSOEP) from 1985 to 1998.
Keywords: Inequality Aversion, Redistribution, Life Satisfaction, Panel Data
JEL Classification: C23, D31, D63, I31
Suggested Citation: Suggested Citation
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