Specific egalitarianism? Inequality aversion across domains

Costa-Font, Joan ORCID: 0000-0001-7174-7919 and Cowell, Frank ORCID: 0000-0002-3778-2152 (2024) Specific egalitarianism? Inequality aversion across domains. III Working Paper (142). International Inequalities Institute, London School of Economics and Political Science.

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Abstract

An individual’s inequality aversion (IA) is a central preference parameter that captures the welfare sacrifice from exposure to inequality. However, it is far from trivial how to best elicit IA estimates. Also, little is known about the behavioural determinants of IA and how they differ across domains such as income and health. Using representative surveys from England, this paper elicits comparable estimates of IA in the health and income domains using two alternative elicitation techniques: a direct trade-off and an indirect “imaginary-grandchild” approach that results from the choices between hypothetical lotteries. We make three distinct contributions to the literature. First, we show that IA systematically differs between income and health domains. Average estimates are around 0.8 for income IA and range from 0.8 to 1.5 for health IA. Second, we find that risk aversion and locus of control are central determinants of IA in both income and health domains. Finally, we present evidence suggesting that the distribution and comparison of IA vary depending on the elicitation method employed.

Item Type:	Monograph (Working Paper)
Additional Information:	© 2024 The Authors
Divisions:	Health Policy International Inequalities Institute Economics
Subjects:	H Social Sciences > H Social Sciences (General) R Medicine > RA Public aspects of medicine H Social Sciences > HC Economic History and Conditions
JEL classification:	H - Public Economics > H1 - Structure and Scope of Government > H10 - General I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy; Regulation; Public Health
Date Deposited:	30 Jul 2024 16:33
Last Modified:	01 Nov 2024 04:10
URI:	http://eprints.lse.ac.uk/id/eprint/124423

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