An Experimental Test of Preferences for the Distribution of Income

John H. Beck

Distribution: Income, Wealth, Other
Information and Uncertainty

Non-computerized experiment

his study investigates the question of how much income redistribution individuals desire in society with random differences in individual incomes. The experiments confronted individuals with choices of lotteries determining their own payoffs -- to determine individual risk aversion -- and with choices of lotteries determining payoffs to everyone in the group -- to determine preferences regarding the distribution of income. Comparison of the results reveal whether preferences for income redistribution are based solely on an individual "insurance motive" or involve preferences for a more equal distribution of income within the group than is explained by individual risk aversion. The results show that the subjects were risk averse but they did not display the extreme risk aversion implied by a Rawlsian maximin rule. The experiments produced conflicting evidence regarding the question of whether individuals favor a more equal income distribution than can be explained by individual risk aversion.