Inequality, Life Expectancy, and the Intragenerational Redistribution Puzzle - Some Experimental Evidence

Arbeitspapier

In most OECD countries, pension reform policy has decreased the level of intragenerational redistribution over the last three decades, that is, redistribution among members of the same generation with high and low pension entitlements. This trend has occurred despite heterogeneity in life expectancy linked to socioeconomic status having a regressive impact on out-comes. This paper contributes to solving this puzzle by means of a controlled laboratory experiment. We study the causal relationship between inequality of entitlements, mortality risk, and the size of redistribution in a stylized social security system. We find that mortality risk, when negatively correlated with entitlements, significantly lowers subjects’ willingness to redistribute payoffs from high-entitlement to low-entitlement subjects. We explain this finding with efficiency preferences and an alienation effect. The alienation effect is the tendency to attach a lower social weight to the short-lived poor.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 9677

Classification and Topics

• Classification: Wirtschaft ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Criteria for Decision-Making under Risk and Uncertainty ; Social Security and Public Pensions ; Health and Inequality
• Subject: inequality ; life expectancy ; risk ; redistribution ; pension reform ; efficiency preferences ; alienation effect experiment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Krieger, Tim ; Meemann, Christine ; Traub, Stefan
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/260807
• Last update: 10.03.2025, 11:42 AM CET