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Abstract:

DARP Paper
Choices in Egalitarian Distribution: Inequality Aversion versus Risk Aversion
Leima Davidovitz and Yoram Kroll
March 1999
Paper No' DARP 043:
Full Paper (pdf)

Tags: inequality; income distribution; risk; experiments

Inequality aversion and risk aversion are widely assumed features of economic models. But a review of the literature revealed that inequlity aversion and risk aversion are treated as separate variables. This paper presents exploratory research designed to separate inequality aversion from risk aversion. In a set of laboratory experiments, subjects chose between two alternatives with the same individuals risk, but different levels of egalitarianism. Thus, the choice of the more egalitarian alternative with constant risk level implies a higher level of inequality aversion. The experiment was conducted among 211 eight-year-old children, 107 of whom live on Kibbutz and 104 in the city. We found not significant difference between Kibbutz children and city children in inequality aversion.