An Experimental Test of Preferences for the Distribution of Income and Individual Risk Aversion

Abstract

This study investigates the question of how much income redistribution individuals desire in a society with random differences in individual incomes. The experiments confronted individuals with choices of lotteries determining their own payoffs--to measure individual risk aversion--and with choices of lotteries determining payoffs to everyone in the group--to measure preferences regarding the distribution of income. The subjects were risk averse, but they did not display the extreme risk aversion implied by a Rawlsian maximin rule. The experiments produced little evidence that individuals favor a more equal income distribution than can be explained by individual risk aversion.

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