Equity Concerns Are Narrowly Framed

by Christine L. Exley and Judd B. Kessler

Overview — This paper based on a large online study finds that individuals tend to differentiate in their concerns about fairness along specific dimensions, especially time and money, and are much more worried about fairness in one (time) than the other (money). These attitudes may help explain a seemingly wide variety of phenomena.

Author Abstract

What are individuals' preferences over the payoffs of others? We show that individuals aim to achieve equity but that they narrowly bracket their equity concerns. Rather than equalize overall budgets, individuals equalize the time component or money component of budgets. Individuals believe that achieving equity within these narrow brackets is more socially appropriate than achieving overall equity. Furthermore, individuals care more about achieving equity in time than equity in money. Narrow bracketing of equity concerns and more inequity aversion in time than in money persist when individuals make allocation choices between themselves and others. Our results can help explain a variety of behavioral phenomena including the structure of social insurance programs, patterns of public good provision, and why transactions that turn money into time are often deemed repugnant.

Paper Information