A fair deal: Inequity aversion and individual attitudes toward trade agreements

Abstract

International trade can cause winners and losers within and across countries. How do these distributional effects matter for individual attitudes toward trade agreements? We argue that individuals exhibit inequity aversion, meaning that they prefer agreements that result in relatively similar payoffs within and across countries. Inequity aversion should be stronger in cases where individuals are personally disadvantaged than when they gain relatively more than others. Two conjoint experiments fielded in two surveys in three countries, a battery of survey questions, a list experiment, and qualitative evidence from open survey questions allow us to test these expectations. The results indicate that aversion to unequal payoffs both within and across countries is indeed a relevant factor shaping attitudes toward trade agreements. We also find some evidence that aversion to disadvantageous inequality is stronger than aversion to advantageous inequality. The study contributes to a rich literature on trade attitudes and our general understanding of how citizens form political attitudes.