TAX POLICY AND INCOME INEQUALITY IN THE UNITED STATES, 1979–2007

This paper assesses the effects of U.S. tax policy reforms on inequality over around three decades, from 1979 to 2007. It applies a new method for decomposing changes in government redistribution into (1) a direct policy effect resulting from policy changes and (2) the effects of changing market incomes. Over the period as a whole, the tax policy changes increased income inequality by pushing up the income share of high‐income earners (the top 20%). (JEL H23, H31, H53, P16)     

Improved cross-entropy method for estimation

The cross-entropy (CE) method is an adaptive importance sampling procedure that has been successfully applied to a diverse range of complicated simulation problems. However, recent research has shown that in some high-dimensional settings, the likelihood ratio degeneracy problem becomes severe and the importance sampling estimator obtained from the CE algorithm becomes unreliable. We consider a variation of the CE method whose performance does not deteriorate as the dimension of the problem increases. We then illustrate the algorithm via a high-dimensional estimation problem in risk management.     

Efficient Monte Carlo simulation via the generalized splitting method

We describe a new Monte Carlo algorithm for the consistent and unbiased estimation of multidimensional integrals and the efficient sampling from multidimensional densities. The algorithm is inspired by the classical splitting method and can be applied to general static simulation models. We provide examples from rare-event probability estimation, counting, and sampling, demonstrating that the proposed method can outperform existing Markov chain sampling methods in terms of convergence speed and accuracy.     

Happily ever after? Intrahousehold bargaining and the distribution of utility within marriage

Using a rich longitudinal data set of married couples from the Korean Labor and Income Panel Study, this article seeks to uncover the intramarital allocation of experienced utility and its drivers. We find both substantial gains from marriage and effects of relative predicted earnings outside of marriage on relative gains from marriage. These findings are consistent with cooperative bargaining models and with models viewing individuals as having a demand for household production services by a spouse, with market forces influencing the price of such services. In addition, we find that men benefit more from marriage than women and that this gender gap is more pronounced for older couples. This is likely to be due to social norms and prescribed gender roles which are more prevalent within the older generation.     

Engendering Response: Professional Gesture and the Assessment of Eyesight in Optometry Consultations

Many of the procedures undertaken within healthcare require specialized forms of participation that may be unfamiliar, even disturbing, to patients or clients. The practitioner has to encourage and enable participation in the investigation in an appropriate fashion while preserving the structure and integrity of the procedure. In this article, we consider optometry and the deployment of a vision test, known as subject refraction, that provides data to help determine the characteristics of any corrective lens that may be required by clients. The procedure's ability to establish robust and reliable data relies upon the optometrist's ability to encourage the client to respond to a series of stimuli without consideration or reflection. That is, the client is required to produce an unwitting response—conduct that might be considered nonsymbolic rather than symbolic. In this article, we also consider the optometrist's talk and bodily comportment during subjective refraction and how it serves to shape and determine the quality of the client's response and participation, and in turn to produce reliable test results.     

RISK AVERSION AND OVERBIDDING IN FIRST PRICE SEALED BID AUCTIONS: NEW EXPERIMENTAL EVIDENCE

Bidding above the risk‐neutral Nash equilibrium in first price sealed bid auctions has traditionally been ascribed to risk aversion. Later studies, however, offer other explanations and even argue that risk aversion plays no or a minor role. In a novel experimental design, we directly test the relationship between risk aversion and overbidding by systematically varying the distribution of risk attitudes in auction markets. We find a significant relationship between our measure of risk aversion and overbidding. (JEL D44, C91)     

Approximate Bayesian inference in semi-mechanistic models

Inference of interaction networks represented by systems of differential equations is a challenging problem in many scientific disciplines. In the present article, we follow a semi-mechanistic modelling approach based on gradient matching. We investigate the extent to which key factors, including the kinetic model, statistical formulation and numerical methods, impact upon performance at network reconstruction. We emphasize general lessons for computational statisticians when faced with the challenge of model selection, and we assess the accuracy of various alternative paradigms, including recent widely applicable information criteria and different numerical procedures for approximating Bayes factors. We conduct the comparative evaluation with a novel inferential pipeline that systematically disambiguates confounding factors via an ANOVA scheme.