Technical appendix: Valuing risk and unequal impacts

Note that, when η = 0, ci is simply the expected income of i. We then calculate the inequality-neutral certainty-equivalent income loss. To do this, we find the equalpercentage loss that, if forfeited by all agents with certainty, yields the same welfare as the actual crosssectional distribution of certainty equivalent losses ci . Denoting the inequality-neutral certainty-equivalent income loss as f and state populations as Ni, we compute welfare: ∑