Published July 2012
| public
Journal Article
Inequality aversion and risk aversion
- Creators
-
Chambers, Christopher P.
Abstract
This note shows that for two social welfare functions which are inequality averse with respect to certainty equivalents, if one is more inequality averse for certainty equivalents than the other, the household preference induced by optimally allocating aggregate bundles according to this social welfare function is more risk averse than the other. We present examples showing that this comparative static can be reversed if absolute inequality aversion is dropped. We show that the utilitarian rule always induces the least risk averse household preference among all social welfare functions (this corresponds to the sum of certainty equivalents).
Additional Information
© 2010 Elsevier Inc. Received 8 February 2010; final version received 28 July 2010; accepted 12 October 2010; Available online 27 October 2010. I am grateful to Federico Echenique for helpful discussions. I am also grateful to two anonymous referees, as well as the associate editor, for useful comments.Additional details
- Eprint ID
- 82924
- DOI
- 10.1016/j.jet.2010.10.016
- Resolver ID
- CaltechAUTHORS:20171102-171702434
- Created
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2017-11-03Created from EPrint's datestamp field
- Updated
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2021-11-15Created from EPrint's last_modified field