Comparing the Monetary and Living Standards Approaches to Poverty Using the Australian Experience

This paper compares the monetary and living standards approaches to poverty using Australian data for the period 2006–2017. The aim is to highlight the conceptual and empirical strengths and weaknesses of the two approaches and identify the similarities and differences that emerge when both are applied to examine what happened over the period and to a limited degree, why. The acknowledged limitations of estimating poverty rates by comparing household income with a poverty line have to a degree been addressed by developments in deprivation research that have generated estimates that are more directly related to living standards, more democratic and more credible. But this approach also has limitations, so its growing popularity need not signify the end of poverty line studies. This paper compares the two approaches, with specific attention paid to ensuring that the estimates are internally consistent over time and comparable at a point in time. Both show a consistent pattern of modest improvement in social disadvantage over the period examined, but they reveal different aspects of change. The monetary approach highlights the role of housing costs in driving changes in poverty, while the more nuanced explanation generated by estimates of deprivation provides detailed insights. The results suggest that each has a positive role to play in better understanding the nature of poverty and identifying the factors driving change over time.

     

Salience,Valence, Context,and Integration: Conceptualizing the Needs of Sexually and Gender Diverse Youth in P–12 Schools

A framework for conceptualizing the needs of lesbian, gay male, bisexual, transgender, questioning, and other sexually and gender diverse youth is essential for guiding service delivery throughout educational settings. Review and synthesis of the literature reveals that integrating assessment of the salience, valence, and context of issues related to sexual and gender diversity facilitates affirmative practice at the individual student, group, and school-wide levels. The authors describe the components of the salience, valence, context, and integration (SVCI) model with emphasis on practical application. The theoretical and empirical support for each component of the model is also discussed.     

Eliciting decision weights by adapting de Finetti’s betting-odds method to prospect theory

This paper extends de Finetti’s betting-odds method for assessing subjective beliefs to ambiguous events. Thus, a tractable manner for measuring decision weights under ambiguity is obtained. De Finetti’s method is so transparent that decision makers can evaluate the relevant tradeoffs in complex situations. The resulting data can easily be analyzed, using nonparametric techniques. Our extension is implemented in an experiment on predicting next-day’s performance of the Dow Jones and Nikkei stock indexes, where we test the existence and nature of rank dependence, finding usual patterns. We also find violations of rank dependence.

Learning in the Allais paradox

Whereas both the Allais paradox, the first empirical challenge of the classical rationality assumptions, and learning have been the focus of many experimental investigations, no experimental study exists today into learning in the pure context of the Allais paradox. This paper presents such a study. We find that choices converge to expected utility maximization if subjects are given the opportunity to learn by both thought and experience, but less so when they learn by thought only. To the extent that genuine preferences should be measured with proper learning and incentives, our study gives the first pure demonstration that irrationalities such as in the Allais paradox are less pronounced than often thought. Paul Anand and Stefan Trautmann made helpful comments.     

Is Transport Safety More Valuable in the Air?

Using a contingent valuation survey, people's willingness to pay for a given risk reduction is found to be much larger, consistently more than two times as large, when traveling by air compared to by taxi. Follow-up questions revealed that an important reason for this discrepancy is that many experience a higher mental suffering from flying, and that they are willing to pay to reduce this suffering. It was also consistently found that people are willing to pay more for a certain risk reduction if the original price was higher. Policy implications are discussed.     

Consequentialist foundations for expected utility

Behaviour norms are considered for decision trees which allow both objective probabilities and uncertain states of the world with unknown probabilities. Terminal nodes have consequences in a given domain. Behaviour is required to be consistent in subtrees. Consequentialist behaviour, by definition, reveals a consequence choice function independent of the structure of the decision tree. It implies that behaviour reveals a revealed preference ordering satisfying both the independence axiom and a novel form of sure-thing principle. Continuous consequentialist behaviour must be expected utility maximizing. Other plausible assumptions then imply additive utilities, subjective probabilities, and Bayes' rule.     

How Much Internalization of Nuclear Risk Through Liability Insurance?

An important source of conflict surrounding nuclear energy is that with a very small probability, a large-scale nuclear accident may occur. One way to internalize the associated financial risks is through mandating nuclear operators to have liability insurance. This paper presents estimates of consumers' willingness to pay for increased financial security provided by an extension of coverage, based on the 'stated choice' approach. A Swiss citizen with median characteristics may be willing to pay 0.14 US cents per kwh to increase coverage beyond the current CHF 0.7 billion (bn.) (US$ 0.47 bn.). Marginal willingness to pay declines with higher coverage but exceeds marginal cost at least up to CHF 4 bn.(US$ 2.7 bn.). An extension of nuclear liability insurance coverage therefore may be efficiency-enhancing.     

Book Reviews

Books reviewed: Alan Walker and Chack‐kie Wong (eds), East Asian welfare regimes in transition: From Confucianism to globalization Robin Lovelock, Karen Lyons and Jackie Powell (eds), Reflecting on Social Work – Discipline and Profession Stephan Leibfried and Michael Zürn, Transformations of the State?     

Unique nontransitive measurement on finite sets

Two themes in the theory of measurement that have been studied extensively in the past few years are numerical representations of nontransitive binary comparison structures and uniqueness in finite measurement systems. This paper brings the two together by exploring the solutions to a nontransitive, additive model that are unique up to multiplication by a positive constant. The model relates to various contexts including decision under risk, evaluation of objectives, comparative probability, and voting theory. The family of unique solutions for the model is shown to be extremely rich and varied.