Working Paper: NBER ID: w22644
Authors: Maureen Cropper; Alan Krupnick; William Raich
Abstract: 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.
Keywords: environmental health risks; Atkinson social welfare function; inequality aversion; health risk distribution
JEL Codes: D61; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| preferences for equality in health risks (I14) | willingness to accept a 50% increase in mean health risk (I12) |
| distribution of health risks (I14) | respondents' preferences (D11) |
| inequality in health risks (I14) | level of aversion experienced by respondents (D11) |
| lexicographic preferences (D11) | prioritizing equal risk distribution (D30) |