Skewness-Adjusted Social Preferences as a Transmission Channel between Inequality and Growth: Experimental Evidence on Elite-Behavior
38 Pages Posted: 29 Nov 2012 Last revised: 2 Mar 2016
Date Written: March 2, 2016
In this paper, we introduce a skewness-adjusted social-preferences functional, which models social preferences as a function of the skewness of the human capital distribution. We hypothesize that the “elite” of the society becomes more selfish with increasing skewness of the human-capital distribution. Hence, the members of the “elite” reduce their human-capital investments, thereby disregarding positive spillover effects. As a consequence, macroeconomic growth diminishes. The results of an experimental test clearly confirm that the model is able to correctly explain and predict the observed pattern of behavior.
Keywords: Inequality, Growth, Social Preferences, Human Capital, Experiments
JEL Classification: C91, O1, D9
Suggested Citation: Suggested Citation