Intertemporal stability of uncertainty preferences

We analyze the stability of ambiguity preferences experimentally, by repeatedly eliciting ambiguity attitudes towards multiple 3-color Ellsberg urns over a period of two months. 57% of the choices show stable preferences over this time period. This is significantly higher than random choices would suggest, but significantly lower than the level of consistency when measures are taken back-to-back (75%). Over the same time frame, we do not find a significant change in the consistency of risk preferences. For subjects who are able to recall their ambiguity decision after two months correctly, the share of consistent choices does not drop significantly over time.     

Intertemporal decision making with present biased preferences

I study the behavior of individuals with present biased preferences who are involved in costly, long-run projects. By using generic cost and reward functions, I characterize the behaviors of the sophisticated, partial naive and naive types. It is shown that there may arise cases where naives needlessly put effort on projects they never complete. Moreover, in endogenous total cost projects, the naive types always end up completing projects of lesser quality than originally intended. By introducing a bonus motive, it is shown that agents with higher self-control problems should be given a higher bonus to prevent inefficient procrastination. I, then, characterize the behavior of partially naives who potentially learn self-preferences. It is found that without learning self-preferences, partial naives behave either like sophisticates or naives depending on the level of naivete; with learning, if the learning pace is fast enough, procrastination until the deadline does not occur.     

Rural poverty

Abstract

This paper examines rural poverty indicators arguing that governments have failed to provide the equitable access to resources needed to empower rural people to address their poverty. The paper illustrates how the decline in the fortunes of agriculture has led to a rapid disintegration of rural communities and to human rights concerns in relation to rural people. On quality of life indicators such as health and education, rural people are seriously disad-vantaged by comparison with urban Australians. Yet, the failure of governments to develop integrated rural policy frameworks that deliver equitable resources and their reliance on market forces is leading to the destruction of rural communities. For social workers, the challenge is to provide advocacy and policy leadership.     

Region-specific versus country-specific poverty lines in analysis of poverty

An analysis of poverty based on a country-specific income poverty line suffers from disregarding regional differences in prices and needs within a country and may, therefore, produce results that give a misleading picture of the extent of poverty as well as the geographic and demographic composition of the poor. To account for differences in prices and needs, this paper introduces an alternative method for identifying the poor based on a set of region-specific poverty lines. Applying Norwegian household register data for 2001 we find that the national level of poverty is only slightly affected by the change in definition of poverty line. However, the geographic as well as the demographic poverty profiles are shown to depend heavily on whether the method for identifying the poor relies on region- or country-specific thresholds. As expected, the results demonstrate that an analysis of poverty based on a country-specific threshold produces downward biased poverty rates in urban areas and upward biased poverty rates in rural areas. Moreover, when region-specific poverty thresholds form the basis of the poverty analysis, we find that the poverty rates among young singles and non-western immigrants are significantly higher than what is suggested by previous empirical evidence based on a joint country-specific poverty line.     

Multidimensional poverty indices

This paper explores the axiomatic foundation of multidimensional poverty indices. Departing from the income approach which measures poverty by aggregating shortfalls of incomes from a pre-determined poverty-line income, a multidimensional index is a numerical representation of shortfalls of basic needs from some pre-specified minimum levels. The class of subgroup consistent poverty indices introduced by Foster and Shorrocks (1991) is generalized to the multidimensional context. New concepts necessary for the design of distribution-sensitive multidimensional poverty measures are introduced. Specific classes of subgroup consistent multidimensional poverty measures are derived based on sets of reasonable axioms. This paper also highlights the fact that domain restrictions may have a critical role in the design of multidimensional indices. Received: 1 March 1999/Accepted: 1 August 2000     

Targeting and child poverty

We examine the relative merits of targeting children within the household through price subsidies and cash transfers. To do so, we model the behavior of a household composed of one adult and one child. We then show that ‘favorable’ distortions from price subsidies may allow redistributing toward the child and then derive the conditions under which this redistributive scheme is more efficient than cash transfers. The framework is extended to account for possible paternalistic preferences of the social planner and for households composed of two adults with different preferences. Applied to a continuum of households, our approach is extended to the problem of child poverty alleviation. In contrast to the traditional view, we show that well-chosen subsidies may be more cost effective than cash transfers in reducing child poverty.     

Pathways to poverty reduction

Of the myriad approaches to reducing poverty, which have proved effective on a national scale? This article analyses 15 systematically selected national cases of demonstrated rapid poverty reduction, seeking insights into effective approaches to reducing poverty. From these 15 economies, in which the bottom quintile experienced an annual increase in income of at least 6% over at least a decade, emerge four poverty‐reduction pathways: (1) industrialisation, (2) rural development, (3) social welfare and (4) petroleum‐generated employment. In addition to helping us understand what policy approaches have actually helped reduce poverty, this article has implications for the understanding of economic growth, the impact of pro‐growth policies, the relationship between state and market, and the roles of non‐government organisations (NGOs) and civil society.     

Horizontal inequity comparisons

In this paper, we expound the idea that horizontal inequity (HI) in different tax systems be compared by transplanting the HI from one tax system into the other, as a mapping between its pre- and post-tax living standard distributions, and then applying known results to compare the extent of association present in the two joint distributions. We make this idea operational by means of axioms which, we show, lead to an implementable procedure based on the `copula'. Statistical inference procedures are discussed, and illustrative empirical exercises are undertaken for the UK, Canadian and Israeli tax and benefit systems. Received: 1 March 1999/Accepted: 29 May 2000     

Robust inequality comparisons

This paper is concerned with the problem of ranking Lorenz curves in situations where the Lorenz curves intersect and no unambiguous ranking can be attained without introducing weaker ranking criteria than first-degree Lorenz dominance. To deal with such situations, Aaberge (Soc Choice Welf 33:235–259, 2009) introduced two alternative sequences of nested dominance criteria for Lorenz curves, which proved to characterize two separate systems of nested subfamilies of inequality measures. This paper uses the obtained characterization results to arrange the members of two different generalized Gini families of inequality measures into subfamilies according to their relationship to Lorenz dominance of various degrees. Since the various criteria of higher degree Lorenz dominance provide convenient computational methods, these results can be used to identify the largest subfamily of the generalized Gini families, and thus the least restrictive social preferences, required to reach unambiguous ranking of a set of Lorenz curves. We further show that the weight-functions of the members of the generalized Gini families offer intuitive interpretations of higher degree Lorenz dominance, which generally has been viewed as difficult to interpret because they involve assumptions about third and higher derivatives. To demonstrate the usefulness of these methods for empirical applications, we examine the time trend in income and earnings inequality of Norwegian males during the period 1967–2005.     

Population growth and poverty measurement

If the absolute number of poor people goes up, but the fraction of people in poverty comes down, has poverty gone up or gone down? The economist’s instinct, framed by population replication axioms that undergird standard measures of poverty, is to say that in this case poverty has gone down. But this goes against the instinct of those who work directly with the poor, for whom the absolute numbers notion makes more sense as they cope with more poor on the streets or in the soup kitchens. This paper attempts to put these two conceptions of poverty into a common framework. Specifically, it presents an axiomatic development of a family of poverty measures without a population replication axiom. This family has an intuitive link to standard measures, but it also allows one or other of “the absolute numbers” or the “fraction in poverty” conception to be given greater weight by the choice of relevant parameters. We hope that this family will prove useful in empirical and policy work, where it is important to give both views of poverty—the economist’s and the practitioner’s—their due.     

Intervention and representation of poverty

Any intervention against poverty is not so much an administrative process as a social relation between categories of actors that are partly defined by it. Being a social action, it implies a construction of meaning that will guide the behavior of the actors. This semantic network needs an interpretation. This article presents a simplified model (an "ideal-type") of this meaningful interaction. It will contrast the way the professional actors of the poverty field present poverty and poor people and the way poor people themselves present their situation and the difficulties they face. This comparison will show the great distance between these discourses.     

Toward better global poverty measures

While much progress has been made over the last 25 years in measuring global poverty, there are a number of challenges ahead. The paper discusses three sets of problems: (i) how to allow for social effects on welfare, recognizing the identification issues involved; (ii) the need to monitor progress in raising the consumption floor above its biological level, in addition to counting the number of people living near the floor; and (iii) addressing the longstanding concerns about prevailing approaches to making inter-country comparisons of price levels facing poor people. Some suggestions are offered for operational solutions, building on past research.     

On measuring vulnerability to poverty

There is a growing interest on dynamic and broader concepts of deprivation such as vulnerability, which takes in to account the destitution of individuals from future shocks. We use the framework of decision making under uncertainty to arrive at a new measure of vulnerability to poverty. We highlight the importance of current standard of living to better capture the notion of vulnerability. In conceptualizing the new class of measures of vulnerability, we thus move beyond the standard expected poverty measures that is commonly found in the literature. We also axiomatically characterize the new class of measure and discuss some of its properties.     

On multidimensional indices of poverty

The contribution of recent “multidimensional indices of poverty” may not be as obvious as one thinks. There are two issues in assessing that contribution: whether one believes that a single index can ever be a sufficient statistic of poverty, and whether one aggregates in the space of “attainments,” using prices when appropriate, or “deprivations,” using weights set by the analyst. The paper argues that we should aim for a credible set of multiple indices rather than a single multidimensional index. Partial aggregation will still be necessary, but ideally the weights should be consistent with well-informed choices by poor people.     

Child poverty and child outcomes

This article reviews the most up to date evidence on the prevalence of child poverty in Britain. It traces how child poverty has changed over the last 20 years, and how child poverty in Britain compares with that in other countries. Then there is a brief section describing the characteristics of poor children. It then reviews evidence of the impact of poverty on the well‐being of children drawing on the ESRC Children 5–16 programme project—Poverty: the Outcomes for Children (Bradshaw, 2001a). It concludes with a discussion of how the Labour Government is doing in its aspirations to abolish child poverty. Copyright © 2002 John Wiley & Sons, Ltd.