the value of explicit randomization in the tax code abstract consider individuals who draw income from the same random distribution but who differ in their risk aversion and who decide whether or not to report their income truthfully the government chooses the tax structure including a random tax option audit probabilities and penalties on detected evaders to maximize expected ex post social welfare high income individuals who do not evade then choose to pay either a given amount or draw from a random tax schedule this schedule ensures that everyone complies with more risk averse individuals choosing the deterministic schedule and less risk averse ones choosing the random tax option

non walrasian equilibria with speculation abstract the paper examines equilibria with out of equilibrium trading there are two types of consumers speculators who feel they have insight into where the ultimate equilibria price of the economy will be and non speculators the limit of the price process is a pareto optimum if and only if speculators are right and at the limit all consumers have zero excess demand when speculators are wrong price processes may converge to non pareto optimal limits with zero excess not every price process has a limit and not every limit of every price process will lead to zero excess demand

the law of genius and home runs refuted i introduction empirical regularities in biology as in other fields can be extremely interesting in particular such regularities may suggest the operation of fundamental laws unfortunately apparent regularities sometimes cannot stand up under close scrutiny solow costello and ward 2003 a lively provocative article by devany 2007 in economic inquiry argues that the statistical law of home run hitting is the same as the laws of human accomplishment developed by lotka pareto price and murray there is no evidence that steroid use has altered home run hitting the greatest accomplishments in science art and music all follow the same universal law of genius and the stable paretian model developed here will be of use to economists studying extreme accomplishments in other areas which apparently follows from his claim that the size distribution of annual home run production has a finite mean but infinite variance and follows a power law distribution devany s argument is not unique it is part of a large and growing literature where claims of the ubiquity of power laws are legion 1 devany takes the additional step of connecting this statistical analysis to an argument about the effect of steroids on home run hitting by major league ballplayers steroid advocates have to argue that the new records are not consistent with the law of home runs and that the law itself has changed as a result of steroid use our purpose of this article is to suggest that the above should be met with a fair amount of skepticism first we try to provide some background on previous attempts to identify the existence of universal laws and provide the intellectual context for devany s claims second we show that devany s claims follow from a flawed statistical inference procedure his procedure with probability l would find evidence consistent with infinite variance for virtually any nontrivial data set to do so we first analyze the size distribution of a quantity which could not follow a power law distribution and show that using devany s inference procedure we would be led to the same incorrect claim we also discuss the important distinction elided by devany and others writing in related literatures between an unconditional distribution and a conditional distribution third we observe that the size distribution of home runs cannot follow a power law distribution and show that the posited class of distributions provide an inadequate approximation to the data at best fourth while concurring with devany s implicit criticism that steroid advocates who rely on recent trends to substantiate their views have not made their case we suggest that the problem is that the question is ill posed the level and distribution of total home runs in any given year is minimally a function of hundreds of things the quality of pitching the weather the introduction of new ball parks the number of games played the distribution of baseball talent across the teams and so forth to claim that only one cause is responsible for a trend involves some possibly unstated assumption about the myriad of other factors indeed what is sauce for the goose is sauce for the gander those seeking to support or deny the claim that increased use of steroids have led to increased home run hitting will have to employ considerably more shoe leather than mere statistical analysis of the unconditional distribution of home runs per player or time trends in home run hitting we conclude by observing that neither examination of time trends in annual home run production nor examination of the unconditional distribution of home runs will settle the dispute between steroid advocates and steroid opponents and that more convincing evidence will have to be sought elsewhere ii

ex ante and ex post welfare optimality under uncertainty it is widely believed by economic theorists that if there were no transactions costs and if all information about the economy were perfectly shared by all then arrow debreu contingent commodity markets should bring about an ideal allocation the basis for this belief seems clear we have the two efficiency theorems of welfare economics which assure us that in the absence of external effects any competitive allocation is pareto efficient and that any pareto efficient allocation is competitive provided that appropriate lump sum transfers are made of course there are some reservations that need to be made local satiation and non convexities are well known to cause problems but these are not the problems i wish to discuss here to return to the usual argument the next step involves noticing how with contingent commodity markets the efficiency theorems of welfare economics carry over to an economy with uncertainty as explained for instance in chapter 7 of debreu s theorpj of value the fundamental value judgment that gives these efficiency theorems their normative interest is what may be called consumer sovereignty it is an assumption that the social welfare ordering should respect the preferences that govern consumers market behaviour it is a serious value judgment more serious than most economists have been prepared to concede but its seriousness increases when there is uncertainty we know full well that individuals misperceive the probabilities of certain events assuming that they even perceive any probabilities at all see for example kahneman and tversky 1979 nor are we always willing to accept as appropriate the attitudes to risk of individuals who seem either extremely reckless or extremely cautious societies are often willing to make some gestures towards property owners who have not insured themselves adequately against damage from fire flood or tempest and not just because of imperfect insurance markets or even misperceptions of probabilities in addition the inequalities of income that arise when some individuals take more risks than others are not necessarily seen to be desirable particularly if an individual has undertaken a useful but risky activity and has a very low income as a result of failure such gestures are examples of contingent lump sum transfers it seems clear that if such transfers occur to a sufficient extent they could supplant completely the securities markets which are usually sufficient to bring about pareto efficiency they may even be able to go further and correct the imperfections of an arrow debreu market allocation when individuals do misperceive probabilities or else have wrong attitudes to risk this is the main question i wish to consider here the idea that consumer sovereignty should not always extend to economies with uncertainty is not new it can be found in work by diamond 1967 dr6ze

on the valuation of uncertainty in welfare analysis thisarticle developsa general model of private and public choice under temporal uncertainty the model incorporatesthe effectsof ris k preferencesand the pros pect of future learning into both the individual and aggregate valuationsof public projects the analys isprovidesnew ins ightson individual valuation itsimplicationsfor benefit cos t analys isand the characterization of paretoefficiency under uncertainty it also resolves some of the confusion in the option value and quasioption value literature private and public decisions typically involve many sources of uncertainty including uncertainty about prices income technology environmental quality health etc temporal uncertainty is also common where some of the risk 1 getsresolved over time due to learning additionally private and public decisions often exhibit some form of irreversibility implying that current choicescan affect the ability of decision makers to be flexible and to adjust their future choices in response to forthcoming information when uncertainty and irreversibility are both present welfare analys isgainscomplexity and importance although considerable progress has been made since weisbrod s seminal article a better understanding of the roles of uncertainty and irreversibility in welfare analys improve our ability aseconomis ts to communicate the importance of risk in project evaluation to public decision makers

winning in professional team sports historical moments our aims in this paper are to 1 examine the higher moments of the distribution of winning percentages and 2 discover economic implications of such an examination the results prove useful to both current sports league policy questions and future research we speculate that the institutional differences between north american pro leagues and european soccer leagues will prove fruitful areas for future research on the determination of competitive balance jel c1 l83 z20

the effects of model specification on foreign direct investment models an application of count data models previous studies have drawn a theoretical and empirical connection between foreign direct investment fdi and exchange rates using continuous measures of fdi however fdi data are often in discrete count form i take a representative study of the fdi exchange rate relationship by jose m campa 1993 and i analyze the sensitivity of the results to specification of the dependent variable whereas campa uses a tobit specification i use a count data specification to model counts of fdi occurrences using data on fdi in the united states from 1982 to 1993 controlling for the traditional determinants of fdi i find that the results are sensitive across specifications significance levels and the magnitude of the coefficients change when going from a continuous tobit specification to a zero inflated poisson zip model designed for count data formal statistical testing finds that the zip specification likely models the data most properly thus i indicate that misspecification bias from modeling discrete data with continuous distributions is important

a welfare criterion for models with distorted beliefs this paper proposes a welfare criterion for economies in which agents have heterogeneously distorted beliefs instead of taking a stand on whose belief is correct our criterion asserts an allocation to be belief neutral ine cient if it is ine cient under any convex combination of agents beliefs while this criterion gives an incomplete ranking of social allocations it can identify negative sum speculation in a broad range of prominent models with distorted beliefs

the external costs of nuclear power ex ante damages and lay risks interest has been growing in embedding the external costs of fuel cycles resulting in electricity generation into prices in any attempt to internalize these costs for the nuclear cycle the remost but real possibilities of accidents and the wide gap between lay perceptions and expert assessments of such risks must be taken into account this paper discusses this including the following topics an expected utility model of power plant operations accident risks simulation comparison of experts versus lay risks comparison of experts versus lay risk literature simulation of expert versus lay risks current practice in estimating the damages from accidents at nuclear power plants appear to ignore significant features of the problem from the perspective of economic analysis individual aversion to risk the exante perspective in decision making under uncertainty and lay risk perception are all conceptually important elements of a damage estimate that accords with observation of behavior and the theory that underlies it but that are ignored by common practice 18 refs 1 tab

just luck an experimental study of risk taking and fairness choices involving risk significantly affect the distribution of income and wealth in society this paper reports the results of the first experiment to our knowledge to study fairness views about risk taking specifically whether such views are based chiefly on ex ante opportunities or on ex post outcomes we find that even though many participants focus exclusively on ex ante opportunities most favor some redistribution ex post many participants also make a distinction between ex post inequalities that reflect differences in luck and ex post inequalities that reflect differences in choices these findings apply to both stakeholders and impartial spectators

heterogeneous beliefs and the effect of replicatable options on asset prices we present two ways in which trading in a replicatable option can affect the price process of the underlying asset in the first situation trading an option that each investor views as pay off redundant breaks a non fully revealing equilibrium that exists when the option market is absent the second situation involves a market that is dynamically complete without options but in which introducing an option market allows self confirming conjectures of additional uncertainty about the future price of the underlying asset heterogeneous beliefs play important though different roles in both situations article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

misperceived job hazards and welfare abstract bayesian workers produce chemicals hazardously in one sector of a two sector economy having one safe sector adopting an expected ex post welfare perspective we show workers misperceptions of hazards entail a classic externality we characterise chemicals competitive monopoly and socially efficient outputs assuming workers receive identical wage accident compensation contracts under each the value of information which induces workers to place greater stress on firms safety records or sharpens their priors and extend the standard monopoly welfare loss index for sufficient conditions for monopoly to be preferred to competition in chemicals and for size ranking monopoly and efficient chemical outputs

ex post efficiency and ex post welfare some fundamental considerations ross starr 1973 demonstrates that a competitive equilibrium while ex ante pareto efficient may not be ex post efficient the authors contend that an implicit second best issue requires that this assertion be substantively qualified specifically the ex ante efficiency concept is second best while its ex post counterpart is first best they est ablish the equivalency of first best ex post and ex ante concepts whe never the second best ex ante efficiency conditions hold the second best elements derive from the timing of information flows starr s theorem is shown to concern the social gains from improved information additional results deal with varying concepts of ex post welfare copyright 1988 by the london school of economics and political science

chance and justice social policies and the harsanyi vickrey rawls problem the determination of the optimal and just policy in the presence of chance and risk encompasses some of the most important problems of societies and can be seen as comprehending the whole issue of distributive justice the application of the general theory of justice to chance and risk reveals the meanings and implicit assumptions of previous studies and it yields useful and meaningful concepts and conclusions such as the strictly concave evaluation function the meaning of the theories of the original position the theories of the partially original position fundamental insurances and selfascriptions and the general logic of the relations between risk and inequality 1998 elsevier science b v all rights reserved

a simple model for merit good arguments abstract in this paper we examine a way of representing merit goods by allowing governments to apply a specific form of correction to consumers preferences the model builds upon an approach to the analysis of taste and quality change due to fisher and shell we look at the first best allocation of resources where this is done we also consider second best policies in which the government must charge the same price to all consumers of the merit good and when optimal lump sum transfers are not available

policy changes in major league baseball improved agent behavior and ancillary productivity outcomes offense in major league baseball mlb has decreased substantially since 2006 often attributed to increased testing and punitive action for use of performance enhancing drugs however there has been concurrent policy change affecting behavior of other league agents that may have also affected game play i therefore examine the effect of these agents mlb umpires on offensive production in baseball estimates reveal that a substantial portion of the offensive reduction from 2008 through 2014 can be attributed to changes in the size of the strike zone implications are further discussed in the context of firm production relevant outcomes as they relate to the labor force and supervisor performance expectations jel j44 z22 z28 l25

intergenerational exchange mobility and economic welfare the concepts of exchange and structural mobility are introduced and their relationship with the notion of equality of opportunity discussed it is then shown that exchange mobility can have an impact on social welfare when the utility of any one generation is dependent on the consumption levels of overlapping generations whether such consumption interrelationships imply a preference for mobility or the reverse depends on whether the marginal utility of current consumption is raised or lowered by an increase in the consumption level of the associated generation the rest of this paper examines these two cases in the context of a simple two class family model the analysis is concerned with the description of the optimal intergenerational behaviour within this framework in order to be able to say anything substantial however it is necessary to impose some restrictions on the structure of the utility function one restriction which has some appeal and which yields plausible patterns of optimal policy is that intergenerational links through the utility function be not too strong in a sense that is made specific in the paper imposing this condition one can show how intra generational equity is affected both by intergenerational considerations and by the inherited past where intragenerational transfers involve efficiency losses a simple tax model is examined the circumstances under which starting with no taxes the tax rates converge are worked out in both the cases where the utility function has a pro as well as an anti mobility bias finally a specific utility function is taken in which the fathers utility depends not only on his own consumption but also on the average consumption of his son and himself in this case the utility function has a pro mobility bias and one can evaluate the response of the long run tax rate to parameters that measure mobility and equality using a similation model one can also assess the speed of convergence and the sensitivity of the tax rates to the parameters

troubled banks impaired foreign direct investment the role of relative access to credit during the 1980 s theories were developed to explain the striking correlation between real exchange rates and foreign direct investment fdi however this relationship broke down for japanese fdi in the 1990 s as the real exchange rate appreciated while fdi plummeted we propose the relative access to credit hypothesis and show that unequal access to credit by japanese firms contributes to the explanation of declining japanese fdi using bank level and firm level data sets we find that financial difficulties at banks were economically and statistically important in reducing the number of fdi projects by japanese firms into the united states jel g21 f36

scaling in economics a reader s guide this paper discusses examples of scaling laws in economics and finance it argues that these regularities in data are useful for disciplining theory formation estimation of the conditional predictive distribution and estimation of impulse response functions is a main goal of econometric work scaling type regularities give useful information on the underlying data generating process the ability of scaling laws to suggest lines of potentially fruitful research was illustrated by the suggestion of several speculative research projects in this paper most importantly the paper stresses the challenges that face empirical and theoretical researchers who wish to make use of scaling law type regularities to improve econometric identification of the underlying causal data generating mechanism copyright 1999 by oxford university press

regional heterogeneity migration and shadow prices abstract this paper deals with some spatial influences on social scarcities first the existence of regional goods which usually implies differences in consumer prices second differences in preferences across locations and third a rigid wage in one region which may result in ex post inequalities among migrants who were identical ex ante it is shown that in general the shadow wage depends on regional differences in the cost of living and preferences and that the effect of a shift from ex ante to ex post social welfare on the shadow wage is unclear in this connection the assumption that the marginal product of labor is locally constant proves to be much stronger than is commonly recognized

labor contracts and the role of monetary policy in an overlapping generations model abstract this paper characterizes labor contracts in a dynamic economy subject to both real and nominal shocks in this environment we compare alternative means of trading labor services spot markets fixed nominal wage contracts and price contingent contracts the welfare ordering of these market structures is shown to depend on the relative variability of the real and nominal shocks and the costs of contingent contracts the paper also investigates the role of monetary policy and the neutrality of feedback rules finally we demonstrate that the optimal policy is nonstochastic

zipf s law for cities an explanation zipf s law is a very tight constraint on the class of admissible models of local growth it says that for most countries the size distribution of cities strikingly fits a power law the number of cities with populations greater than s is proportional to 1 s suppose that at least in the upper tail all cities follow some proportional growth process this appears to be verified empirically this automatically leads their distribution to converge to zipf s law

distributive justice for behavioural welfare economics the incompleteness of behavioural preferences can lead many or even all allocations to qualify as pareto optimal but the incompleteness does not undercut the precision of utilitarian policy recommendations utilitarian methods can be applied to groups of goods or to the multiple social welfare functions that arise when individual preferences are incomplete and policymakers do not need to provide the preference comparisons that individuals are unable to make for themselves the utilitarian orderings that result although also incomplete can generate a unique optimum non separabilities in consumption reduce this precision but in all cases the dimension of the utilitarian optima drops substantially relative to the pareto optima

expected poverty under risk induced welfare variability two of the most widely accepted stylised facts about agriculture in south asia sub saharan africa and elsewhere are that income is highly uncertain from one year to another and that deep and widespread poverty exists and yet there has been very little analysis of the joint problems of poverty and risk this paper offers a methodological approach to the issue of how risk affects poverty and applies it to household level data for dry areas of rural india the following questions are addressed under what conditions can one expect an increase in the riskiness of an income or consumption stream to increase poverty how should one measure the contribution of risk to poverty and what long term benefits in terms of reduced poverty can be expected from policies aimed at stabilising incomes of the poor such policies have been widely discussed in the indian subcontinent of late and their effect on rural

ex ante evaluation of health states and the provision for ill health this paper examines the motivation for states to intervene in the provisions that their citizens make for ill health the author examines arguments that relate to imperfect information and a kind of misperception which he calls evaluator relativity he identifies ex post regret as being the force that may justify intervention that helps to sidestep some of the problems that arise when expected utility is invoked as a welfare criterion copyright 1989 by royal economic society

social insurance with risk reducing investments a two sector model with sector dependent disability risks is presented working in the low risk sector requires skills that can be obtained by investments in education moral hazard precludes full insurance the labour force allocation is responsive to the incentives created by a social insurance system the rationale for intervention lies in the government s power to cross subsidize between the sectors and it is demonstrated how the responsiveness of the labour force allocation limits cross subsidization the second best policy is time inconsistent the consistent equilibrium is explored and is argued to provide weak incentives to reduce risks ties to live off their own work recently social insurance has come under scrutiny owing to increased pressures to reduce government expenditures one critical view that has been put forward is that a public system that pools work ers with different occupations may cause a significant loss of welfare since different occupations are associated with different levels of risk it is argued that pooled systems while adhering to a general notion of fairness cause an inefficient allocation of the labour force put in simple terms pooled systems implicitly subsidize risky activities and thereby promote excessive undertaking of such activities the purpose of this study is to investigate the problem of social insurance design in a setting where workers can influence the disability risks they are exposed to by choosing a low risk occupation the model presented has two sectors a high risk sector and a low risk sector working in the low risk sector requires some kind of costly investment which we represent as a choice of education although it is clear that any investment undertaken by the work ers e g migration investments leads to precisely the same trade offs the workers choose which sector to enter in response to the incentives created by the social insurance system this allows an analysis of the trade off between the efficiency of the labour force allocation and distributive concerns as well as a characterization of optimal social insurance under various assumptions about the government s ability to cross subsidize and to affect occupational choices following the seminal work by diamond and mirrlees 1978 a moral hazard problem precludes full insurance and creates a second best environment our framework is similar in some respects to that of whinston 1983 in a pure moral hazard framework whinston shows that optimal contracts cross subsidize in favour of more accident prone workers to an extent that makes them better off than less accident prone workers on this point we extend whinston s result by identifying the exact redistributive rule and by providing an interpretation of the result as an instance of tagging whinston further

sufficient conditions for inessentiality three theorems state conditions sufficient for the inessentiality of equilibrium in a pure exchange sequence economy the agents have uncommon priors state contingent utility functions and asymmetric information in every trading period and they trade different sets of event contingent claims in different periods the theorems provide alternative interpretations of the concept of market completeness reveal two fundamentally different ways to obtain inessentiality and shed light on the conditions permitting speculation and the role of price contingent trading none of the theorems requires ex ante pareto optimality or the absence of arbitrage opportunities copyright 1993 by the econometric society

the pareto principle of optimal inequality the pareto principle is often viewed as a mild requirement compatible with a variety of value judgements in particular it is generally thought that it can accommodate different views on the desirable degree of equality we show that this is generally not true in intertemporal models where some uncertainty prevails to do so we formalize the concept of inequality aversion we show that different degrees of inequality aversion are not possible in typical models of time consistent dynamic decision under uncertainty

adoption curves and social interactions this paper considers the observational implications of social influences on adoption decisions for an environment of perfect foresight adopters we argue that social influences can produce two observable effects 1 discontinuities in unconditional adoption curves and 2 pattern reversals in conditional adoption curves in which earlier adoption is found for one group of actors versus another when fundamentals suggest the reverse ordering should occur in turn the presence of either of these features can under weak assumptions be interpreted as evidence of social influences as such these properties are robust implications of social effects jel c40 d01 o33

the role of ex ante and ex post decisions in the valuation of life abstract this paper examines the use of ex ante and ex post criteria in the evaluation of projects involving the risk of death one issue concerns the appropriate welfare function and it is argued that this should reflect both ex post and ex ante considerations but not in the form of restrictions on the welfare function the second issue concerns the form of compensation the argument in favour of ex post compensation as a means of reducing the cost of risk bearing needs to be modified when risks involve more than a single dimension as they do in projects involving the risk of death

a zero inflated negative binomial regression model with hidden markov chain abstract this paper proposes a zero inflated negative binomial regression model with hidden markov chain for panel count data with excess zeros and provides an estimation method using the em and quasi newton algorithms an application to the analysis of fdi is given

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

on endogenous formation of price expectations abstract we study a two period exchange economy with complete financial markets and endogenous borrowing constraints contrary to perfect foresight paradigm we assume that agents are heterogeneous in their ability to forecast future prices we introduce a new equilibrium concept called informationally constrained equilibrium where the formation of price expectations is endogenous and reflects the revelation of information from observing bounds on liabilities designed to ensure solvency at any contingency we prove that under standard assumptions an equilibrium always exists and we characterize the degree of information revealed by the endogenous debt limits

the veil of public ignorance abstract a theory of cooperative choice under incomplete information is developed in which agents possess private information at the time of contracting and have agreed on a utilitarian standard of evaluation governing choices under complete information the task is to extend this standard to situations of incomplete information our first main result generalizes harsanyi s j polit econ 63 1955 309 classical result to situations of incomplete information assuming that group preferences satisfy bayesian coherence and interim pareto dominance these axioms are mutually compatible if and only if a common prior exists we argue that this result partly resolves the impossibility of bayesian preference aggregation under complete information

ex post welfare economics and the theory of merit goods in recent years a number of papers have questioned the extension of the main theorems of welfare economics to a world of uncertainty stemming from the work of arrow 1953 and debreu 1959 the arrow debreu extension is based on the idea that consumer preferences may be defined on state contingent commodities as a special but important case these preferences may be represented by von neumann morgenstern utilities with this interpretation of the commodity space the main theorems of weltare economics remain valid in a world of uncertainty a competitive equilibrium is a pareto optimum a pareto optimum can be sustained as a competitive equilibrium and the diagnosis of the causes of market failure remains as before there are several reasons why one may feel uneasy about this construction a good deal of attention has been paid to the assumption of universality of markets necessary to establish the connection between equilibrium and optimum on a deeper level perhaps are the doubts that one may have about the criterion of welfare or efficiency first should social welfare be a function of individuals expected utilities or should the appropriate concept be that of expected welfare second if probability beliefs are not identical across individuals whose probabilities if any should be used for welfare evaluation in the next section we review some concepts and results in the recent literature on ex post welfare economics and in section ii it is argued that this literature can provide the foundations for a more satisfactory theory of merit goods a concept originally introduced by musgrave 1959 this idea is applied in section iii to a model with a complete set of markets in the arrow debreu sense and in sections iv and v to an incomplete markets model which provides the most natural framework for the study of merit goods various remarks on further aspects of the problem are collected in the concluding section of the paper

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

the choice of a welfare measure under uncertainty use of option price as a welfare measure when conducting a benefit cost analysis under uncertainty is appropriate only if the project under consideration will have no impact on the allocation of risk among individuals use of the willingness to pay locus as a benefit measure is appropriate only if the project will result in an efficient allocation of risk a more general welfare measure is proposed maximum agreeable payment that correctly measures the benefits and costs of any project