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A ‘Leaky Bucket’ in the Real World: Estimating Inequality Aversion using Survey Data
Author(s) -
PIRTTILÄ JUKKA,
UUSITALO ROOPE
Publication year - 2010
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/j.1468-0335.2008.00729.x
Subject(s) - inequity aversion , economics , inequality , unemployment , survey data collection , econometrics , risk aversion (psychology) , economic inequality , welfare , statistics , mathematics , mathematical economics , expected utility hypothesis , macroeconomics , mathematical analysis , market economy
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 inequality aversion can be measured in a meaningful way using survey data, but the magnitudes of the estimates depend dramatically on how inequality aversion is measured. 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.