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The fairness of inequality due to risk and effort choices

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Sterba,  Maj-Britt
Max Planck Institute for Research on Collective Goods, Max Planck Society;

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2022_05online.pdf
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Citation

Sterba, M.-B. (2022). The fairness of inequality due to risk and effort choices.


Cite as: https://hdl.handle.net/21.11116/0000-000A-94BD-A
Abstract
Three determining factors for economic inequality are self-chosen effort, self-chosen risk, and external circumstances. The fairness people assign to inequalities due to effort and external circumstances is widely studied. Insights on the fairness of inequalities due to self-chosen effort and self-chosen risk, however, are lacking. I study a novel experimental setting where inequality is due to a choice over effort-provision and a choice over risk-taking. While the resulting inequality is mostly seen as fair, around 10% of third-party redistribution decisions are in line with a fairness norm that only considers the choice over effort.