Equity Concerns are Narrowly Framed

Abstract

Research funding for this paper came from Harvard Business School and the Wharton School of the University of Pennsylvania. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Not Playing Favorites: An Experiment on Parental Fairness Preferences

“…Do they equalize within short or long time horizons, or within specific investment domains (e.g., health vs. education) or across all investments? In our experiment, parents narrowly bracket, and Exley and Kessler (2019) suggest that narrow bracketing of equity concerns is a widespread phenomenon. The more narrowly parents bracket outside of experimental settings, the higher the efficiency cost of equalizing inputs is likely to be.…”

“…Since inequality aversion in our model is over expected inputs and outcomes, this raises a question regarding the level at which parents evaluate the expectation. We assume that parents "narrowly bracket" and try to equalize expected inputs and outcomes within scenarios;Exley and Kessler (2019) show that people generally narrowly bracket equity concerns. This assumption is conservative for estimating inequality aversion: if instead parents try to minimize expected inputs and outcomes across scenarios, that would bias us away from detecting inequality aversion.17 In particular, parents who are averse to inequalities in consumption but not earnings might returns maximize at the investment stage and then reallocate ex post.…”

Why Do Migrants Stay Unexpectedly? Misperceptions and Implications for Integration

“…2 2 Evidence for this type of behavior goes from the failure of people (i) to combine multiple lotteries and thus losing out on the bene…ts of diversi…cation (Kahneman and Tversky (1979); Redelmeier and Tversky (1992); Rabin and Weizsäcker (2009)); (ii) to combine multiple decisions for sharing money among other people (Exley and Kessler (2018); Ellis and Freeman (2020)); (iii) to combine additional e¤ort with baseline e¤ort (Fallucchi and Kaufmann (2020)).…”

Deciding Who Gets What, Fairly

“…Consumers are also less prone to some mental accounting effects for time than for money (Kahneman and Tversky 1984;Leclerc, Schmitt, and Dube 1995), may be less susceptible to the sunk cost effect for time than for money (Arkes and Blumer 1985;cf. Navarro and Fantino 2009;Soman 2001), exhibit more inequity aversion for time than for money (Exley and Kessler 2017), and tend to rely more on heuristics when spending time than when spending money (Saini and Monga 2008). Time is also more emotionally evocative than money (Liu and Aaker 2008); consequently, activating the concept of time (vs. money) can improve product evaluations (Mogilner and Aaker 2009) and increase happiness (Mogilner 2010).…”