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

See all articles by Fabian Paetzel

Fabian Paetzel

University of the German Federal Armed Forces - Helmut Schmidt Universität; DFG Research Group 2104

Stefan Traub

University of the German Federal Armed Forces - Department of Economics; University of the German Federal Armed Forces - DFG Research Group 2104

Date Written: March 2, 2016

Abstract

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

Paetzel, Fabian and Traub, Stefan, Skewness-Adjusted Social Preferences as a Transmission Channel between Inequality and Growth: Experimental Evidence on Elite-Behavior (March 2, 2016). Available at SSRN: https://ssrn.com/abstract=2181999 or http://dx.doi.org/10.2139/ssrn.2181999

Fabian Paetzel (Contact Author)

University of the German Federal Armed Forces - Helmut Schmidt Universität ( email )

Holstenhofweg 85
Hamburg, 22008
Germany

DFG Research Group 2104 ( email )

Holstenhofweg 85
Hamburg, DE 22043
Germany

HOME PAGE: http://bedarfsgerechtigkeit.hsu-hh.de/en?set_language=en

Stefan Traub

University of the German Federal Armed Forces - Department of Economics ( email )

Holstenhofweg 85
Hamburg, 22043
Germany

University of the German Federal Armed Forces - DFG Research Group 2104 ( email )

Holstenhofweg 85
Hmaburg, DE 22043
Germany

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