beyond gdp the quest for a measure of social welfare this paper critically examines the various approaches to the measurement of individual well being and social welfare that have been considered for the construction of alternatives to gdp special attention is devoted to recent developments in the analysis of sustainability in the study of happiness in the theory of social choice and fair allocation and in the capability approach it is suggested in the conclusion that although convergence toward a consensual approach is not impossible for the moment not one but three alternatives to gdp are worth developing jel i31 e23 e01

a dominance approach to the appraisal of the distribution of well being across countries abstract this paper proposes a dominance approach to study inequality of well being across countries we consider a class of well being indices based on the three attributes used in the hdi human development index indices are required to satisfy preference for egalitarian marginal distributions of income health and education alep substitution of attributes and priority to poor countries in allocating funds to enhance health and education we exhibit sufficient conditions for checking dominance over the defined class of well being indices we apply our method to country data from 2000 to 2005 the deterioration in health conditions in poor countries is why welfare improvements at the world level cannot be ascertained

assessing policies to equalize opportunity using an equilibrium model of educational and occupational choices abstract the inter generational correlation of education in the u s is tremendous for instance in psid data from 1990 young males with college educated parents had a 70 chance of attending college but those with high school drop out parents had only a 15 chance in this paper we analyze the impact of college attendance bonus schemes designed to increase college attendance rates and pv of lifetime income of youth from disadvantaged backgrounds of course policies that increase the supply of skilled labor may reduce the college wage premium see heckman et al heckman james lochner lance and taber christopher explaining rising wage inequality explorations with a dynamic equilibrium model of labor earnings with heterogeneous agents review of economic dynamics 1 1998a 1 58 heckman james lochner lance and taber christopher general equilibrium treatment effects a study of tuition policy american economic review 88 2 1998b 381 386 this may have the unintended consequence of wiping out most of the gains to the targeted groups the strength of such equilibrium effects on wages depends on the substitutability between different types of labor thus it is important to evaluate education subsidies within an equilibrium framework that allows for flexible patterns of substitution across factor inputs this is exactly what we do here using an overlapping generations equilibrium model of the u s labor market fit to psid data from 1968 to 1996 the model allows for imperfect substitution among types of labor differentiated by education gender age and ten 1 digit level occupations a much finer differentiation than has been considered in prior work we find that very large college attendance bonuses are necessary to equate college attendance rates between youth whose parents had only high school degrees or were high school dropouts and youth whose parents attended at least some college the size of these bonuses far exceeds any reasonable measure of college costs suggesting the costs the bonuses overcome are primarily psychic or effort costs for example youth from disadvantaged backgrounds may be poorly prepared for college this suggests that bonuses targeted at college age youth are probably a very inefficient way to reduce inequality earlier intervention is likely called for

guaranteed lowest prices do they facilitate collusion abstract the effects of a policy guaranteeing lowest price are analyzed in a two stage game where firms first decide whether to adopt such a policy and then choose prices symmetric and asymmetric games are solved to examine the extent to which prices can rise to collusive levels

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

the effects of market practices in oligopolistic markets an experimental examination of the ethyl case this study reports on the performance of experimental markets characterized by industrial structure and practices similar to those at issue in the ethyl case the central question is whether price competition is affected by the practices of advanced notification of price changes and most favored nation contracts or is determined by industrial organization and concentration alone

sources of lifetime inequality is lifetime inequality mainly due to differences across people established early in life or to differences in luck experienced over the working lifetime we answer this question within a model that features idiosyncratic shocks to human capital estimated directly from data as well as heterogeneity in ability to learn initial human capital and initial wealth we find that as of age 23 differences in initial conditions account for more of the variation in lifetime earnings lifetime wealth and lifetime utility than do differences in shocks received over the working lifetime jel d31 d91 j24 j31 to what degree is lifetime inequality due to differences across people established early in life as opposed to differences in luck experienced over the working lifetime among the individual differences established early in life which ones are the most important a convincing answer to these questions is of fundamental importance first and most simply an answer serves to contrast the potential importance of the myriad policies directed at modifying or at providing insurance for initial conditions e g public education against those directed at shocks over the working lifetime e g unemployment insurance second a discussion of lifetime inequality cannot go too far before discussing which specific type of initial condition is the most critical for determining how one fares in life third a useful framework for answering these questions should also be central in the analysis of a wide range of policies considered in macroeconomics public finance and labor economics we view lifetime inequality through the lens of a risky human capital model agents differ in terms of three initial conditions initial human capital learning ability and financial wealth initial human capital can be viewed as controlling the intercept of an agent s mean earnings profile whereas learning ability acts to rotate

innovation diversity and diffusion a self organisation model a number of features of innovation diffusion are identified appropriability diversity expectations selection learning and spillover externalities a dynamic model is formul ated to embed the diffusion question into a more general framework of disequilibrium competition the model incorporates distinct vintage structures reflecting a change in technological trajectory learning by using a nd expectations driven investment rules of thumb simulation studies reveal robust quasi logistic curves but a complicated pattern of net market share gains and losses uncertainty regarding the rationality of early or late adoption it is argued ensures that the requisite behavioral variety is present to generate these diffusion patterns copyright 1988 by royal economic society

approaches to inequality of opportunity principles measures and evidence we put together the dierent conceptual issues involved in measuring inequality of opportunity discuss how these concepts have been translated into computable measures and point out the problems and choices researchers face when implementing these measures our analysis identies and suggests several new possibilities to measure inequality of opportunity the relevance of the conceptual issues and modelling choices are illustrated with ndings from the empirical literature on income inequality of opportunity

on the incidence and variety of low price guarantees abstract this paper provides evidence of the incidence and variety of low price guarantees promises to match or beat a rival s price using data obtained from newspaper advertisements in 37 metropolitan areas in the united states we have a total of 515 low price guarantees in our sample we document their features and we infer firms motives and effects from these features the evidence suggests that the majority of low price guarantees are not consistent with their use as a facilitating device because they tend to apply only to rival firms advertised prices or they are associated with high hassle costs the evidence also suggests that price beating and price matching guarantees differ significantly in their features the former are associated with higher hassle costs apply disproportionately to rival firms advertised prices and are more likely to allow postsale search than are price matching guarantees

unfair inequalities in health and health care inequalities in health and health care are caused by different factors measuring unfair inequalities implies that a distinction is introduced between causal variables leading to ethically legitimate inequalities and causal variables leading to ethically illegitimate inequalities an example of the former could be life style choices an example of the latter is social background we show how to derive measures of unfair inequalities in health and in health care delivery from a structural model of health care and health production direct unfairness linked to the variations in medical expenditures and health in the hypothetical distribution in which all legitimate sources of variation are kept constant fairness gap linked to the differences between the actual distribution and the hypothetical distribution in which all illegitimate sources of variation have been removed these two approaches are related to the theory of fair allocation in general they lead to different results we propose to analyse the resulting distributions with the traditional apparatus of lorenz curves and inequality measures we compare our proposal to the more common approach using concentration curves and analyse the relationship with the methods of direct and indirect standardization we discuss how inequalities in health care can be integrated in an overall evaluation of social inequality

inequality of opportunity in sub saharan africa in the last decades inequality of opportunity has been extensively studied by economists on the assumption that in addition to being normatively undesirable it can be related to low potential for growth this paper evaluates inequality of opportunity and the different sources of unequal opportunities in 11 sub saharan africa countries the results indicate that the portion of total inequality that can be attributed to exogenous circumstances that is circumstances outside the control of individuals control is between 30 percent and 40 percent in the countries considered the results also indicate a positive association between total consumption inequality and inequality of opportunity finally this paper addresses a number of methodological issues that typically arise when measuring inequality of opportunity with imperfect data which is the typical case in developing countries

consumer search costs and market performance i introduction one of the seminal developments leading to the information economics revolution in the 1970s and 19c0s was diamond s 1971 theoretical result that in the absence of publicly posted price information the existence of even a small search cost could lead to monopoly pricing the intuition is straightforward no buyer with one price quote would want to search for a second unless it is likely that the buyer would encounter a price reduction that covers the search cost thus each seller has an incentive to price slightly above any common price and the noncooperative equilibrium in a single stage game yields a monopoly price this result is viewed as a paradox since a small search cost produces high prices but a zero search cost would produce the usual bertrand incentives that drive prices to competitive levels in the absence of capacity constraints and other imperfections 1 recent theoretical work has focused on finding a resolution to the paradox stahl 1989 for example generates a smooth transition between competitive and monopoly outcomes as the fraction of consumers with zero search costs increases from zero to one interestingly stahl finds that increasing the number of sellers makes pricing more monopolistic holding the number of informed buyers constant bagwell and ramey 1992 propose an alternative resolution that applies to an infinitely repeated market game where sellers who raise prices can develop a reputation that can affect sales in future periods bagwell and ramey show that buyers can obtain lower equilibrium prices by following a loyalty boycott search rule where low pricing sellers are rewarded with repeated purchases and high pricing sellers are punished with switching the price predictions vary continuously between monopoly and competitive levels depending on the size of the consumer search cost the policy relevance of the diamond paradox depends on whether there are realistic market environments in which small reductions in the availability of price information can cause large price increases 2 due to the difficulty of controlling and measuring information flows in natural markets the laboratory represents an ideal place to evaluate the diamond paradox and proposed resolutions the only experimental analysis of these issues is reported by grether schwartz and wilde 1988 who observed monopoly pricing in three of four predicted cases these results are suggestive but not definitive for reasons discussed below in particular as grether schwartz and wilde 1988 328 observe all four cases involved the same group of subjects to the extent possible this paper reports an experiment consisting of twelve market sessions designed to assess the effects of public price information the markets are conducted as normal posted offer markets except that buyers must pay a small cost each time they approach a different seller in baseline posted offer treatments all prices are publicly displayed to buyers while in search treatments prices are not publicly displayed in brief we find that prices approach competitive levels under the posted offer treatment and prices are significantly higher under the search treatment nevertheless the diamond prediction of monopoly pricing under search is not observed although increases in search costs do raise prices these results indicate that economists should take a more careful look at attempts to resolve the diamond paradox by introducing other factors that may impede monopoly pricing in markets with consumer search the paper is organized as follows our two primary treatments are outlined in section ii and results are presented in section iii the failure to observe the diamond monopoly price prediction motivated additional research on the effects of reputations and search costs which is presented in section iv the final section contains a conclusion ii

it takes two to tango equilibria in a model of sales we show that the varian model of sales with more than two firms has two types of equilibria a unique symmetric equilibrium and a continuum of asymmetric equilibria in contrast the 2 firm game has a unique equilibrium that is symmetric for the n firm case the asymmetric equilibria imply mixed strategies that can be ranked by first order stochastic dominance this enables one to rule out asymmetric equilibria on economic grounds by constructing a metagame in which both firms and consumers are players the unique subgame perfect equilibrium of this metagame is symmetric

a multisectoral micro macrodynamic model e crescimento economico uma resenha tematica sobre a nova economia institucional this is a simulation model that intends to integrate macro dynamics with structural and sectoral features that shape and modify it it is an attempt to analyze the macrodynamic effective demand effects of endogenous structural changes in the same setup micro macro interactions result in the model from each level having its own dynamics dependent on the inputs it receives from the others each sector is modeled according to neo schumpeterian evolutionary microfoundations with additional unorthodox micro behavioral assumptions together with exogenous foreign and government sectors they are integrated into a multisectoral model the main features of the model are 1 simulated sectoral trajectories of a stylized economy derive from endogenous competitive dynamics as well as direct input output and indirect income consumption interactions 2 sectors are distinguished according to their role in the productive structure and demand categories consumption intermediate and capital 3 no equilibrium is assumed dynamic interactions among firms decisions based on adaptive expectations and their effects generate open ended trajectories even though the simulation results presented in this paper

fair income tax fairness is a key concept in redistribution issues in this paper we study how particular requirements of fairness can shed light on the design of the optimal income tax schedule we consider a population of heterogeneous individuals or households who differ in two respects first they have unequal skills and therefore unequal earning abilities second they differ in terms of their preferences about consumption and leisure and as a consequence typically make different labour time choices both kinds of differences generate income inequalities we study how to justify and compute a redistribution income tax in this context redistribution through an income tax usually entails distortions of incentives but the resulting efficiency loss has to be weighed against potential improvements in the fairness of the distribution of resources we address this efficiency equity trade off here by constructing social preferences which obey the standard pareto principle in addition to fairness conditions

automated pricing rules in electronic posted offer markets i introduction electronic commerce affords the opportunity to automate the process by which buyers and sellers engage in an exchange at a mutually agreeable price for example buyers on the internet can use software agents to automate the gathering of information on price and other product attributes in online retail markets that are traditionally organized as posted offer markets 1 this technology obviously reduces the consumer transaction costs of comparing prices which presumably would induce stronger competition among sellers however as hal varian remarked in the e commerce magazine wired everybody thinks more information is better for consumers that s not necessarily true bayers 2000 215 the same technology that reduces consumer transaction costs can be employed by sellers to automate the monitoring of rivals prices which might mitigate or even overwhelm the procompetitive effect of reduced consumer search costs in addition electronic markets grant more than just ideal information on competitors pr ices with electronic commerce a seller can commit to implementing an automated algorithm that could possibly sustain tacitly collusive prices in this article we study the supply side effects of three automated pricing algorithms that use price information as an input that could be retrieved from consumer price gathering technology in an electronic market two of the three algorithms that we study have the theoretical potential to facilitate collusion low price matching and a trigger strategy the third and presumably more competitive algorithm which we refer to as undercutting is drawn from the common retail practice of beating competitors prices using the experimental method this article explores how sellers deploy these three automated pricing algorithms in electronic markets more specifically we ask 1 do sellers prefer to set their price manually or to adopt automated algorithms that adjust price more frequently 2 are markets with automated pricing algorithms more competitive or less competitive than markets with manually posted prices 3 does increased commitment to an automated pricing mechanism facilitate tacit collusion to study the impact of automated pricing on seller behavior we base our work on the model of price dispersion in retail markets by varian 1980 thus our article also explores how well a theory of mixed strategy pricing organizes the behavior of sellers in a market with a nearly continuous stream of differentially informed fully revealing customers 2 as a preview of the results we find that 1 sellers employ automated pricing algorithms more often than they manually set their own price 2a automated undercutting leads to prices similar to the game theoretic prediction 2b automated low price matching generates prices significantly higher than the game theoretic prediction 2c automated trigger pricing results in market prices below the game theoretic prediction and 3 greater commitment to automated low price matching shifts prices closer to the joint profit maximizing outcome the structure of the article is as follows section ii presents the three automated pricing algorithms we consider the experimental design and procedures are in section iii section iv presents and discusses our results and section v briefly concludes ii automated pricing algorithms the market environment is motivated by the model of sales in varian 1980 3 in this model there are n sellers that supply buyers who each desire to purchase at most one unit of a homogeneous product each seller has a commonly known constant marginal cost c of supplying a unit to a buyer and posts a price p which the buyer can accept or reject the private value v for each nonstrategic buyer is assumed to be a random variable drawn independently from a known uniform distribution with a support v v buyers differ based on the number of firms from which price quotes are received prior to making a purchasing decision

to each the same and to each his own a proposal to measure responsibility sensitive income inequality this paper deals with the question of how to incorporate modern responsibility catering egalitarianism into economic theory on the measurement of income inequality i present a particular axiomatic expression of the main aspects of such egalitarianism then to measure offensive inequality separately i construct a norm or reference income distribution based upon the axiomatic model to replace the perfectly equal income distribution that is used as norm by all common inequality measures i defend the use of a particular measure of distributional change to determine the degree of offensive inequality and apply the method to belgian income data

equality of opportunity theory and measurement during the last third of the twentieth century political philosophers actively debated about the content of distributive justice the ruling ethical view of utilitarianism was challenged by various versions of equality of opportunities economists formulated several ways of modeling these ideas focusing upon how individuals are placed with respect to opportunities for achieving various outcomes and what compensation is due to individuals with truncated opportunities after presenting a review of the main philosophical ideas section 2 we turn to economic models sections 3 and 4 we propose a reformulation of the definition of economic development replacing the utilitarian measure of gdp per capita with a measure of the degree to which opportunities for income acquisition in a nation have been equalized finally we discuss issues that the econometrician faces in measuring inequality of opportunity briefly review the empirical literature section 6 and conclude section 7

different selling strategies in bertrand oligopoly abstract i analyse a bertrand oligopoly game where firms can choose between selling strategies i price announcements ii price announcements and offers to price match i establish the set of nash equilibria and show that only the monopoly price nash equilibrium satisfies iterative dominance

kantian optimization a microfoundation for cooperation abstract although evidence accrues in biology anthropology and experimental economics that homo sapiens is a cooperative species the reigning assumption in economic theory is that individuals optimize in an autarkic manner as in nash and walrasian equilibrium i here postulate a cooperative kind of optimizing behavior called kantian it is shown that in simple economic models when there are negative externalities such as congestion effects from use of a commonly owned resource or positive externalities such as a social ethos reflected in individuals preferences kantian equilibria dominate the nash walras equilibria in terms of efficiency while economists schooled in nash equilibrium may view the kantian behavior as utopian there is some perhaps much evidence that it exists if cultures evolve through group selection the hypothesis that kantian behavior is more prevalent than we may think is supported by the efficiency results here demonstrated

measuring unfair in equality abstract this paper shows one way of generalizing the standard framework of inequality measurement to allow for a distinction between fair and unfair inequalities we introduce the unfairness lorenz curve and the unfairness gini which are generalizations of the standard versions of the lorenz curve and the gini with this more general framework in place we study the implications of responsibility sensitive theories of justice for the evaluation of the income distribution in norway from 1986 to 2005 we find that both the pre tax and the post tax income distributions have become less fair in norway even though the standard gini for the pre tax income distribution has decreased in the same period two trends explain this development the increase in income share of the top percentile and the change in the situation of females in the labor market the concentration of income at the top of the distribution contributes both to increased unfairness and increased inequality whereas the increase in females working hours and level of education primarily contributes to a reduction in inequality thus the latter effect dominates for the standard gini and the former effect for the unfairness gini furthermore we find that the increase in post tax unfairness is even larger than the increase in pre tax unfairness which shows that the tax system in norway contributes less to eliminating unfairness in 2005 than in 1986

measuring long term inequality of opportunity abstract in this paper we introduce a new family of rank dependent measures of inequality and social welfare consistent with the equality of opportunity eop principle the proposed framework can be used to measure long term as well as short term eop depending on whether we let permanent income or snapshots of income form the basis of the analysis furthermore it allows for both an ex ante and an ex post approach to eop there is long term ex post inequality of opportunity if individuals who exert the same effort have different permanent incomes in comparison the ex ante approach focuses on differences in the expected permanent income between groups of individuals with identical circumstances to demonstrate the empirical relevance of a long run perspective on eop we exploit a unique panel data from norway on individuals incomes over their working life span this allows us to examine how well analysis of opportunity inequality based on snapshots of income approximate the results based on permanent income

recent evolutionary theorizing about economic change this famous passage from marshall s principles of economics it first appeared in the fifth edition which came out in 1907 nicely brings out two issues which are as germane to economics today as they were when marshall wrote the first is the heavy reliance by economists in their formal theorizing on the notion of equilibrium the other is the appeal that biological conceptions3x201d have for many economists particularly when their focus is on economic change

monetary policy inequality and political instability voters in the industrialised countries are increasingly expressing dissatisfaction by dissenting from the established political parties and candidates based on the concepts of justice by hayek rawls and buchanan we argue that the growing dissatisfaction is rooted in the asymmetric pattern of monetary policies since the mid 1980s for two reasons first the structurally declining interest rates and the unconventional monetary policy measures have granted privileges to specific groups second the increasingly expansionary monetary policies have negative growth effects which have reduced the scope for compensation of the ones excluded from the privileges as a result the acceptance of the prevailing economic and political order is undermined and political instability increases

economic development as opportunity equalization economic development should be conceived of as the degree to which an economy has implemented an efficient and just distribution of economic resources the ubiquitous measure of gdp per capita reflects a utilitarian conception of justice where individual utility is defined as personal income and social welfare is the average of utilities in a population a more attractive conception of justice is opportunity equalization here a two dimensional measure of economic development is proposed based upon viewing individuals incomes as a consequence of circumstances effort and policy the first dimension is the average income level of those in the society with the most disadvantaged circumstances and the second dimension is the degree to which total income inequality is due to differential effort as opposed to differential circumstances this pair of numbers is computed for a set of 22 european countries no country dominates all others on both dimensions the two dimensional measure induces a partial ordering of countries with respect to development

ex ante inequality of opportunity in health decomposition and distributional analysis of biomarkers abstract we use a set of biomarkers to measure inequality of opportunity iop in the risk of major chronic conditions in the uk applying a direct ex ante iop approach we find that inequalities in biomarkers attributed to circumstances account for a non trivial part of the total variation for example observed circumstances account for 20 of the total inequalities in our composite measure of multi system health risk allostatic load we propose an extension to the decomposition of ex ante iop to complement the mean based approach analysing the contribution of circumstances across the quantiles of the biomarker distributions shapley decompositions show that for most of the biomarkers the percentage contribution of socioeconomic circumstances education and childhood socioeconomic status relative to differences attributable to age and gender increase towards the right tail of the biomarker distribution where health risks are more pronounced

robust inequality of opportunity comparisons theory and application to early childhood policy evaluation this paper develops a criterion to assess equalization of opportunity that is consistent with theoretical views of equality of opportunity we characterize inequality of opportunity as a situation

to what extent do fiscal regimes equalize opportunities for income acquisition among citizens to what extent do fiscal regimes equalize opportunities for income aquisition among citizens journal of public economics

equality of opportunity and luck definitions and testable conditions with an application to income in france abstract we offer a model of equality of opportunity that encompasses different conceptions expressed in the public and philosophical debates in addition to circumstances whose effect on outcome should be compensated and effort which represents a legitimate source of inequality we introduce a third factor luck that captures the random factors whose impact on outcome should be even handed for equality of opportunity to be satisfied then we analyze how the various definitions of equality of opportunity can be empirically identified given data limitations and provide testable conditions definitions and conditions resort to standard stochastic dominance tools lastly we develop an empirical analysis of equality of opportunity for income acquisition in france over the period 1979 2000 which reveals that the degree of inequality of opportunity tends to decrease and that the degree of risk of income distributions conditional on social origin appears very similar across all groups of social origins

robust cross country analysis of inequality of opportunity abstract international rankings of countries based on inequality of opportunity indices may not be robust vis a vis the specific metric adopted to measure opportunities indices often aggregate relevant information and neglect to control for normatively irrelevant distributional factors this paper shows that gap curves can be estimated from cross sectional data and adopted to test hypotheses about robust cross country comparisons of in equality of opportunity

differences in wage distributions between canada and the united states an application of a flexible estimator of distribution functions in the presence of covariates we construct a tractable flexible functional form estimator of cumulative distribution functions for non negative random variables which admits large numbers of covariates the estimator adopts and extends techniques from the spell duration literature for estimating hazard functions to distribution functions for wages earnings and income we apply these methods to investigate sources of wage inequality for full time male workers between canada and the united states finding that the canadian wage density has a thinner left tail because low educated workers have higher pay and a thinner right tail because of a lower proportion of highly educated workers unions appear to play a large role in these outcomes

ex ante versus ex post equality of opportunity we study the difference between the ex post and ex ante perspectives in equality of opportunity we show that the well documented conflicts between compensation and reward are but an aspect of a broader conflict between ex ante and ex post perspectives the literature that takes the goal of providing equal opportunities as the guiding principle generally considers that this is implemented only when ex post all individuals with the same effort obtain equal success it is easy to believe that ex ante compensation is another natural embodiment of the same idea we show that this is not true