We present and test the idea that bequest planning is linked with the experience of inheriting. We consider 'a family tradition of bequeathing' as a channel through which the intention to bequeath is ...moulded by and is positively correlated with the experience of inheriting. Using data from the Survey on Health, Ageing and Retirement in Europe (SHARE), we find that the experience of inheriting enhances the intention to bequeath, independently of the positive impact of wealth. We also find that the expectation of inheriting has a positive impact on the intention to bequeath, controlling for the expected increase in wealth on account of future inheritances.
Fifty years ago Eytan Sheshinski constructed a composite measure of social welfare in which income per capita enters positively, and income inequality enters negatively: social welfare was defined as ...a strictly increasing function of the product of income per capita and one minus the Gini coefficient. In the case of a population of two persons whose incomes are distinct, Sheshinski states that social welfare depends only on the lower income, which reduces the social welfare function to the Rawlsian social welfare function. We show that this is not true: social welfare depends on both incomes, and there is no congruence with the Rawlsian perspective.
The social stress experienced by an individual from having a low relative income or from having a low income-based rank is a derivative of the individual's location in social space, and is the ...outcome of unfavorable comparisons with other individuals in that space. (The term social space stands for the set of individuals with whose incomes or with whose income-based ranks the individual compares his income or his income-based rank.) The stress that arises from unfavorable social comparisons can cause physical and mental harm. Essentially, there are three ways to thwart unfavorable income-related comparisons experienced by an individual: to operate on the individual's income or on a characteristic (an attribute) of the individual's income; to operate on the incomes or on a characteristic of the incomes of the individual's comparators; or to modify the individual's social space. The first two approaches feature extensively in the existing literature. The third does not. In this communication, I analyze this third approach, keeping in mind its application as a policy tool for lowering social stress.
Social stress can cause physical and mental harm. It is therefore not surprising that public health policy makers have sought to identify and implement policies aimed at tackling this social ill. A ...frequently prescribed remedy is to reduce social stress by reducing income inequality, which is typically measured by the Gini coefficient. Decomposing the coefficient into a measure of a population’s social stress and a population’s income makes it possible to show that steps taken to lower the coefficient can actually exacerbate social stress. We formulate conditions under which lowering the Gini coefficient coincides with increasing social stress. If the aim of public policy is to improve public health and increase social welfare, and if social welfare is reduced by social stress, then lowering the Gini coefficient may not be the right course of action.
Wildman (
2021
), who identifies “a clear association between income inequality measured by the Gini coefficient and COVID-19 cases and deaths,” concludes that “a goal of government should be to ...reduce income inequalities and thereby improve the COVID-19 outcomes / underlying health of their populations.” In this Comment, we argue that reducing the Gini coefficient of the income distribution of a population need not weaken the population’s social stress. It is this stress which is a source of adverse health outcomes of the population. Because a measure of this stress is a
component
of the Gini coefficient, reducing the coefficient can leave the measure as is, or even increase the measure.
Acknowledging that individuals dislike having low relative income renders trade less attractive when seen as a technology that integrates two economies by merging separate social spheres into one. We ...define a “trembling trade” as a situation in which gains from trade are less than losses in relative income, with the result that global social welfare is reduced. We show that a “trembling trade” can arise even when trade is more gainful in four ways: through trade the absolute income of everyone increases, the income gap in both economies is reduced, as is the income gap between the trading economies. However, trade brings populations, economies, or markets that were not previously connected closer together in social space. As a consequence, separate social spheres merge, and people’s social space and their comparators are altered. Assuming that people like high (absolute) income and dislike low relative income, the aggregate increase in unhappiness caused by the trade-induced escalation in relative deprivation can result in a negative overall impact of trade on (utilitarian-measured) social welfare, if the absolute income gains are not large enough to mitigate the relative income losses.
In a recent article, “Reexamining the influence of conditional cash transfers on migration from a gendered lens,” Hughes (2019) claimed that conditional cash transfers, CCT, limit the likelihood of ...migration by women, compensating them for giving up an attractive migration option. I question the analysis that lies behind this claim. I argue that in seeking to understand the likelihood of women migrating if they participate in a CCT program, issues of selectivity, endogeneity, and optimization cannot be set aside. In particular, it is not that receiving CCT curtails a migration option; it is that not contemplating migration encourages women to accept CCT. And if a household perspective is brought to bear, then a household’s free choices weaken the appeal of migration to women. This reduction in appeal does not arise from an exogenously imposed curb but rather from endogenously determined preferences.
I study attitudes towards risk taking in cases where a person relates to others positively, namely altruistically. This study is needed because it is unclear how altruism influences the inclination ...of an altruistic person to take risks. Will this person's risk-taking behavior differ if the utility of another person does not enter his utility function? Does being altruistic cause a person to become more reluctant to take risks because a risky undertaking turning sour will also damage his ability to make altruistic transfers? Or does altruism induce a person to resort to risky behavior because the reward for a successful outcome is amplified by the outcome facilitating a bigger transfer to the beneficiary of the altruistic act? Specifically, holding constant other variables, I ask: is an altruistic person more risk averse or less risk averse than a comparable person who is not altruistic? In response to this question, using a simple model in which preferences are represented by a logarithmic utility function, I show that an altruistic person who is an active donor (benefactor) is less risk averse than a comparable person who is not altruistic: altruism is a cause of greater willingness to take risks. The finding that the altruism trait causes greater willingness to take risks has not previously been noted in the existing literature.
Abstract Sen (1973 and 1997) presents the Gini coefficient of income inequality in a population as follows. “In any pair-wise comparison the man with the lower income can be thought to be suffering ...from some depression on finding his income to be lower. Let this depression be proportional to the difference in income. The sum total of all such depressions in all possible pair-wise comparisons takes us to the Gini coefficient.” (This citation is from Sen 1973, p. 8.) Sen’s verbal account is accompanied by a formula (Sen 1997, p. 31, eq. 2.8.1), which is replicated in the text of this note as equation (1). The formula yields a coefficient bounded from above by a number smaller than 1. This creates a difficulty, because the “mission” of a measure of inequality defined on the unit interval is to accord 0 to perfect equality (maximal equality) and 1 to perfect inequality (maximal inequality). In this note we show that when the Gini coefficient is elicited from a neat measure of the aggregate income-related depression of the population that consists of the people who experience income-related depression, then the obtained Gini coefficient is “well behaved” in the sense that it is bounded from above by 1. We conjecture a reason for a drawback of Sen’s definition, and we present repercussions of the usage of the “well-behaved” Gini coefficient.
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