Inequality Aversion and the Environment

Ben Groom (London School of Economics)

May 20, 2019, 11:00–12:15


Room MS 003

Environment Economics Seminar


Measures of inequality aversion and pure time preference are elicited in environmental domains using hypothetical decision tasks. Estimates are elicited using comparisons of inequalities across space and time, with gain/loss and past/present contextual framing. Inequality aversion is shown to depend on the environmental domain, time and space and framing. Inequality aversion is lower in the temporal than in the spatial domain, and lower still if the future is 'green' rather than 'brown' for air pollution, forests, and soil fertility. Pure time preference also differs across environmental domains and framing. The results cast doubt on the classical Utilitarian formulation of inter-temporal social welfare, but provide empirical evidence to calibrate dual discount rates or changing relative prices. This is important for welfare evaluation of long-term interventions with environmental consequences, like climate change mitigation or biodiversity conservation. (Joint with Frank Venmans)