Preferences for Equality in Environmental Outcomes

Maureen Cropper, Alan Krupnick, William Raich

NBER Working Paper No. 22644
Issued in September 2016
NBER Program(s):Environment and Energy Economics

Benefit-cost analyses of health regulations traditionally evaluate their economic efficiency—ignoring equity. To help address the importance of equity, we develop a survey to elicit respondents’ preferences towards equality in health risks stemming from environmental causes. Survey responses are used to parameterize an Atkinson index over environmental health risks. We compare these results to similar questions in the income context and find that respondents are significantly more averse to inequality in health risks than in income. The mean respondent is willing to accept a 22% increase in average health risk if risks are equally distributed in the population, but willing to accept a decrease of only 5% in average income if incomes are equally distributed in the population. We find that 30% of respondents answer health risk questions lexicographically—always preferring an equal distribution of risks to an unequal distribution, even if the latter makes everyone better off.

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Document Object Identifier (DOI): 10.3386/w22644

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