Inequality and Growth: Some Welfare Calculations


  • Staff General Research Papers Archive


  • The main lotteries individuals face during their lifetime are country and family of birth. How much consumption growth would a newborn sacrifice to avoid these lotteries? We find that he may be willing to sacrifice a large fraction, if not all, to avoid them. Critical elements for the results are time discounting and risk aversion. Both reduce the effect of growth on welfare while risk aversion increases the benefits of more equal outcomes. Another key factor is the staggering size of risk at birth. Our calculations suggest a research agenda that treats growth and inequality as priorities.

fecha de publicación

  • 2010-11

Líneas de investigación

  • Business Cycles
  • Economic Growth
  • Inequality
  • Welfare Costs


  • 32119