Munich Personal RePEc Archive

Subjective well-being approach to the valuation of income inequality

Beja, Edsel Jr. (2011): Subjective well-being approach to the valuation of income inequality.

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Abstract

The subjective well-being approach to valuation is applied to the valuation of income inequality. Results show that objective inequality is a bad in the industrialized economies but a good in the emerging economies. Too much objective inequality is a bad in both areas. Results also show that people in both areas consider income inequality as a good, thus suggesting that income disparities are viewed as incentives to work harder and take risks. Such findings on subjective inequality make sense if people have knowledge or even hope that opportunities for economic advancement are available despite the presence of objective inequality in their society. Ensuring that people get fair chances to opportunities is a reasonable first step if income inequality is yet not viewed as a problem. To draw out a demand for redistribution requires actions that are intended to transform the consciousness of the people.

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