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Effects of gain-loss frames on advantageous inequality aversion

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Abstract

This paper studies individuals’ preference for reducing advantageous inequality in the distribution of gains and losses. Combining the inequality aversion model of Fehr and Schmidt (Q J Econ 114(3):817–868, 1999) with loss aversion à la Kahneman and Tversky (Econom J Econom Soc:263–291, 1979), we predict the relative dislike for advantageous inequality is lower when outcomes are framed as losses than when outcomes are framed as gains. We test this prediction using data from two modified dictator game experiments. Consistent with the model, we find that the amount of payoff that subjects are willing to sacrifice to increase the net payoff of others and reduce advantageous inequality is smaller under a loss frame than under a gain frame. The results also show that women are more inequality averse than men in both gains and losses.

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Notes

  1. In Attanasi et al. (2016), there were in total three tasks: (i) elicitation of advantageous inequality aversion, (ii) risk aversion, and (iii) a strategic game. Lampach et al. (2016) introduced four tasks in the experiment: (i) elicitation of advantageous inequality aversion, (ii) risk aversion, (iii) ambiguity aversion and (iv) a liability game.

  2. Instructions are presented in Supplementary Materials.

  3. One reason why our gain treatment results are different from those of Blanco et al. (2011) and Beranek et al. (2015) may be that our experiment was run in a different country (France). There are also some differences in the design (e.g. they use a MDG with 21 payoff vectors).

  4. Although the initial estimate of loss aversion provided by Tversky and Kahneman (1992) was 2.25, several studies have found lower values. A recent meta-analysis of several papers (Walasek et al. 2018) reports a median \(\lambda\) of 1.31 and a 95% confidence interval between 1.10 and 1.53.

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Authors and Affiliations

  1. BETA, CNRS and University of Strasbourg, 61 avenue de la forêt noire, 67085, Strasbourg, France

    Kene Boun My

  2. Centre for Legal Theory and Empirical Jurisprudence, KU Leuven, 41 Tiensestraat, 3000, Leuven, Belgium

    Nicolas Lampach

  3. BETA, University of Strasbourg, 61 avenue de la forêt noire, 67085, Strasbourg, France

    Mathieu Lefebvre

  4. Division of Social Science, New York University Abu Dhabi, Saadiyat Island, PO Box 129188, Abu Dhabi, United Arab Emirates

    Jacopo Magnani

Authors
  1. Kene Boun My
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  2. Nicolas Lampach
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  3. Mathieu Lefebvre
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  4. Jacopo Magnani
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Corresponding author

Correspondence to Nicolas Lampach.

Additional information

The authors gratefully acknowledge financial support by the project “Creative, Sustainable Economies and Societies” (CSES) coordinated by Robin Cowan, funded through the University of Strasbourg IDEX Unistra. We thank Giuseppe Attanasi, Dominik Bauer, Tarek Jaber-Lopez, Russel Neudorf, Sandrine Spaeter, Gisèle Umbhauer, the Editor and two anonymous reviewers of the Journal of Economic Science Association for their helpful and constructive comments. All remaining errors are our own.

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Boun My, K., Lampach, N., Lefebvre, M. et al. Effects of gain-loss frames on advantageous inequality aversion. J Econ Sci Assoc 4, 99–109 (2018). https://doi.org/10.1007/s40881-018-0057-2

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  • DOI: https://doi.org/10.1007/s40881-018-0057-2

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