Browsing by Author "Daruvala, Dinky"

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Are people inequality averse or just risk averse?
(2001) Johansson-Stenman, Olof; Daruvala, Dinky; Carlsson, Fredrik; Department of Economics
Individuals' preferences for risk and inequality are measured through experimental choices between hypothetical societies and lotteries. The median relative risk aversion, which is often seen to reflect social inequality aversion, is between 2 and 3. We also estimate the individual inequality aversion, reflecting individuals' willingness to pay for living in a more equal society.Left-wing voters and women are both more risk- and inequality averse than others. The model allows for non-monotonic SWFs, implying that welfare may decrease with an individual's income at high income levels. This is illustrated in simulations based on the empirical results.
Do you do what you say or do you do what you say others do?
(2008-06-12T06:08:12Z) Carlsson, Fredrik; Daruvala, Dinky; Jaldell, Henrik
We design a donations vs. own money choice experiment comparing three different treatments. In two of the treatments the pay-offs are hypothetical. In the first of these, a short cheap talk script was used, and subjects were required to state their own preferences in this scenario. In the second, subjects were asked to state how they believed an average student would respond to the choices. In the third treatment the pay-offs were real, allowing us to use the results to compare the validity of the two hypothetical treatments. We find a strong hypothetical bias in both hypothetical treatments where the marginal willingness to pay for donations are higher when subjects state their own preferences but lower when subjects state what they believe are other students preferences. The explanation is probably a self-image effect in both cases. We find that it is mainly women who are prone to hypothetical bias in this study.
Experimental Studies on Risk, Inequality and Relative Standing
(2006) Daruvala, Dinky
This thesis consists of four separate experimental studies that concern individuals’ preferences and choices on issues of risk, inequality and relative standing. In the first paper, individuals' aversion to risk and inequality, and their concern for relative standing, are measured through experimental choices between hypothetical societies. It is found that, on average, that individuals are both fairly inequality-averse and have a strong concern for relative income. The results are used to illustrate welfare consequences based on a utilitarian SWF and a modified CRRA utility function. It is shown that the social marginal utility of income may then become negative, even at income levels that are far from extreme. The second paper measures individuals’ preferences for risk and inequality using choices between imagined societies and lotteries. Most of the respondents in the study are found to be individually inequality averse, reflecting a willingness to pay for living in a more equal society. Left-wing voters and women are both more risk and inequality averse than others. The model allows for non-monotonic SWFs, implying that welfare may decrease with an individual’s income at high income levels, which is illustrated in simulations based on the empirical results. The third paper tests the relative performance of some of the competing social preference models have been developed inspired by the evidence from economic experiments. This is done using an experimental design that is aimed at capturing pure distributional concerns in a multi-person setting. We find that the individuals in this study are heterogeneous and that they do not follow any single notion of fairness or inequality aversion. In addition, the results suggest that efficiency concerns are not confined to students of economics but are important to students of all disciplines. The fourth paper reports results from an economic experiment where respondents are asked to make choices between risky outcomes for themselves and others. In addition, we elicit information about the respondents’ perception of others risk preferences. We investigate whether subjects’ own risk preferences and gender stereotypes are reflected in the prediction they make for the risk preferences of others and the way this occurs. We find no significant difference in risk preferences between men and women in the experiment. However, both men and women perceive women to be more risk averse than men. When predicting other people’s risk preferences, the respondents tend to use a combination of their own risk preferences and stereotypes. Moreover, when making risky choices for others, the respondents generally use a combination of their own risk preferences and their average predicted risk preference of the targeted group.
Gender, Risk and Stereotypes
(2006) Daruvala, Dinky; Department of Economics
This paper reports results from an economic experiment where respondents are asked to make choices between risky outcomes for themselves and others. In addition, we elicit information about the respondents’ perception of others risk preferences. We investigate whether subjects’ own risk preferences and gender stereotypes are reflected in the prediction they make for the risk preferences of others and the way this occurs. We find no significant difference in risk preferences between men and women in the experiment. However, both men and women perceive women to be more risk averse than men. When predicting other people’s risk preferences, the respondents tend to use a combination of their own risk preferences and stereotypes. Moreover, when making risky choices for others, the respondents generally use a combination of their own risk preferences and their average predicted risk preference of the targeted group.
Measuring hypotheticalgrandparents preferences for quality and relative standings
(2001) Daruvala, Dinky; Carlsson, Fredrik; Johansson-Stenman, Olof; Department of Economics
Individuals' aversion to risk and inequality, and their concern for relative standing, are measured through experimental choices between hypothetical societies. It is found that on average individuals are both fairly inequality-averse and have a strong concern for relative income. The results are used to illustrate welfare consequences based on a utilitarian SWF and a modified CRRA utility function. It is shown that the social marginal utility of income may then become negative, even at income levels that are far from extreme.
Value of statistical life and cause of accident: A choice experiment
(2008-12-09T12:02:35Z) Carlsson, Fredrik; Daruvala, Dinky; Jaldell, Henrik
The purpose of this study is to compare value of statistical life (VSL) estimates for traffic, drowning and fire accidents. Using a choice experiment in a mail survey of 5000 Swedish respondents we estimated the willingness to pay for risk reductions in the three accidents. In the experiment respondents were asked in a series of questions, whether they would choose risk reducing investments where type of accident, cost of the investment, the risk reduction acquired, and the baseline risk varied between questions. The VSLs for fire and drowning accidents were found to be about 1/3 lower than that for traffic accidents. Although respondents worry more about traffic accidents, this alone cannot explain the difference in VSL estimates. The difference between fire and drowning accidents was not found to be statistically significant.
Would The Right Social Preference Model Please Stand Up!
(2006) Daruvala, Dinky; Department of Economics
A number of competing social preference models have been developed inspired by the evidence from economic experiments. We test the relative performance of some of these models using an experimental design that is aimed at capturing pure distributional concerns in a multi-person setting. We find that the individuals in this study are heterogeneous and that they do not follow any single notion of fairness or inequality aversion. In addition, the results suggest that efficiency concerns are not confined to students of economics but are important to students of all disciplines.