Leaky Bucket in the Real World: Estimating Inequality Aversion Using Survey Data
30 Pages Posted: 26 Jun 2007
Date Written: June 2007
Existing evidence of inequality aversion relies on data from class-room experiments where subjects face hypothetical questions. This paper estimates the magnitude of inequality aversion using representative survey data, with questions related to the real-economy situations the respondents face. The results reveal that the magnitude of inequality aversion can be measured in a meaningful way using survey data, but the estimates depend dramatically on the framing of the question. No matter how measured, the revealed inequality aversion predicts opinions on a wide range of questions related to the welfare state, such as the level of taxation, tax progressivity and the structure of unemployment benefits.
Keywords: inequality aversion, social welfare functions, welfare state
JEL Classification: D31, D63
Suggested Citation: Suggested Citation