Risk and Social Preferences: Theory and Evidence on Support for Redistribution and Environmental Protection

This paper examines how risk attitudes and social preferences shape support for redistributive and environmental policies. We propose a micro-founded explanation in which support for redistribution arises from two mechanisms: an insurance motive and fairness concerns. Both risk aversion and social preferences increase demand for redistribution, with a substitution effect whereby higher aversion to social risk lowers the threshold of social preferences needed to support it. For environmental protection, these factors operate in parallel, increasing support for policies that mitigate negative consumption externalities. When individuals choose between policy domains, preferences depend on perceived future income uncertainty and the weight assigned to externalities, making the overall effect ambiguous. We test these predictions using a nationally representative dataset of 6,000 observations from six European countries. The empirical results confirm our hypotheses.