evaluating decision strategies for equity of public risks many important decisions include the loss of life among their possible consequences alternative actions have different implications for the number of possible fatalities the equity of those eventual fatalities and the equity of the process resulting in those fatalities this paper defines a concept of ex ante risk equity to address the equity of the process and distinguishes this concept from the ex post risk equity of the fatalities the paper indicates that an analysis of decision strategies addresses ex ante equity in this context both types of equity as well as loss of life are included in a von neumann morgenstern utility model developed to evaluate public risks this approach provides a method to investigate the implications of different value judgments in examining alternatives and illustrates an appropriate use of von neumann morgenstern utility for problems involving social consequences such as public risks

ex ante equity in public risk in evaluating decision alternatives that involve risk of death among members of the public there are two types of equity that must be considered namely ex ante and ex post equity among the two ex ante equity is more controversial this paper suggests refinements to recent definitions of ex ante equity based on distribution of individuals risks across equally desirable outcomes and historical inequity

urban biased policies and rising income inequality in china since the start of economic reforms in 1978 china has experienced the largest increase in income inequality of all countries for which comparable data are available according to the world bank 1997 china s gini coefficient increased from 28 2 in 1981 to 38 8 in 1995 based on official survey data another study that used internationally standard definitions for incomes estimated china s gini ratio at 38 2 in 1988 and 45 2 in 1995 a level that already surpassed many developing economies in asia azizur khan and carl riskin 1998 are these income inequality changes the consequence of institutional reforms that replaced egalitarian rewards with work incentives employment contracts and labor mobility this paper uses household survey data collected by china s state statistical bureau ssb to investigate the sources and causes of this rising inequality by analyzing gini ratios and generalized entropy measures i decompose the overall inequality into three sectoral components i inequality within rural areas ii inequality within urban areas and iii sectoral disparity the data indicate that increases in rural urban income differentials have been the driving factor behind the rising overall inequality in china i argue that urbanbiased policies and institutions including labor mobility restrictions welfare systems and financial policies of inflation subsidies and investment credits to the urban sector are responsible for the long term rural urban divide and the recent increases in disparity

a theory of political transitions we develop a theory of political transitions inspired by the experiences of western europe and latin america nondemocratic societies are controlled by a rich elite the initially disenfranchised poor can contest power by threatening revolution especially when the opportunity cost is low for example during recessions the threat of revolution may force the elite to democratize democracy may not consolidate because it is redistributive and so gives the elite an incentive to mount a coup highly unequal societies are less likely to consolidate democracy and may end up oscillating between regimes and suffer substantial fiscal volatility

redistribution and government tactical behaviour an analysis of local public expenditure in china after the 1994 tax reform during the last few decades significant changes have affected chinese public finance in 1994 a major tax reform was undertaken and central local sharing arrangements were deeply modified the evolutions of regional public expenditure in the years following the reform deserve to be analysed the issue is relevant for two additional reasons first income inequality is becoming a relevant issue and it is therefore important to understand whether the chinese government is pursuing some kind of redistribution policy second an analysis of the local expenditure dynamics might provide some important information concerning the objectives and the behaviour of the chinese government the article considers a set of structural political and socio economic variables to analyse the determinants of local public expenditure in 30 chinese regions over the period 1995 2007 the results reveal that redistribution seems not to be a priority for the chinese government expenditure is higher in richer and more internationally open regions and the only redistribution evidence that emerges is related to urban rural disparities

rural urban disparity and sectoral labour allocation in china this study examines china s rural urban segmentation and its causes in the context of economic reforms household survey and aggregate data indicate a v shaped process in which rural urban consumption and income differentials decreased between 1978 and 1985 but then have continually increased to historically high levels this sectoral division is consistent with production function estimates based on provincial data that reveal higher labour productivity in urban state owned industries than in rural industries and agriculture to explain the v shaped change we argue that the precedent of successful rural reforms raised farmers relative earnings but the remaining obstacles to an efficient sectoral allocation of labour have prevented china from eliminating dualism recent financial policies consisting of urban price subsidies and increased investment credits have also had influential distribution effects that are biased against the rural sector

why did the elites extend the suffrage democracy and the scope of government with an application to britain s age of reform a new rationale is presented for why an elite may want to expand the franchise even in the absence of threats to the established order expanding the franchise can turn politicians away from particularistic politics based on ad personam redistribution within the elite and foster competition based on programs with diffuse benefits if these programs are valuable a majority of the elite votes in favor of an extension of the franchise despite the absence of a threat from the disenfranchised we argue that the evolution of public spending and of political competition in nineteenth century britain is consistent with our model i introduction at the beginning of the nineteenth century in most countries narrow elites had a disproportionate influence on public affairs even in england where parliament was an influential institution suffrage was mostly the privilege of the wealthy and some members of parliament were elected in boroughs with as few as 100 voters while cities such as manchester did not have any representative a century later most western countries had universal male suffrage with female suffrage to arrive shortly thereafter what brought about this democratic revolution in many cases the elites were forced out of power after violent revolutions however there are important examples such as england where democratization took the form of gradual extensions of the suffrage and these were accompanied by little overt violence it is the peculiar pride of england that the record of social and political reform is to be found on the statute book not in the annals of revolution cheyney 1931 p vii such peaceful democratizations are difficult to rationalize within the benchmark political economic models in those models extending the franchise dilutes the elite s power to influence policy and results

equity axioms for public risks from the perspective of a two person society we explain and analyze six axioms for equity among individuals who are exposed to the possibility of death from a public hazard the axioms are concerned with how a given total risk expected fatalities is distributed over the four possible life death consequences for the two people maximal subsets of mutually compatible equity axioms are identified first for a monotonic ordinal utility function and then for a more restrictive von neumann morgenstern utility function

health utility indices and equity considerations the aim of this paper is to propose methods that incorporate equity concerns into cost utility analysis the focus of the paper is on qalys but the results apply to health utility indices in general two interpretations of qalys are considered qalys as von neumann morgenstern utilities and qalys as measures of health a justification is provided for aggregating consistently scaled qalys as utilities over individuals the conditions underlying unweighted aggregation of qalys are identified these conditions exclude two common types of equity concern algorithms are proposed that take into account equity concerns and that are relatively easy to apply

when efficient is insufficient fairness in decisions affecting a group many key decisions have significant consequences for a group of people rather than a single individual in some cases traditional group decision making techniques such as negotiation voting or compromise can be employed by the group members themselves to determine a satisfactory course of action in other instances however the intervention of a central decision maker may be necessary intervening on behalf of a group raises additional concerns for the decision maker one of which is fairness this paper builds upon envy based fairness concepts from the fair allocation literature and theories of ex ante and ex post equitable distributions from the social risk literature to develop a model for choice among limited options under uncertainty when preferences are heterogeneous the model is therefore appropriate when other existing models are not an example demonstrates an application of the model for choice under uncertainty and contrasts the approach and decision recommendation with that of existing models by quantifying the degree of envy rather than treating it dichotomously the approach captures the balance between fairness and efficiency some envy may be tolerated if it brings greater overall utility and or if some envy already exists in the status quo option lastly implementation issues and the impact of differing preferences and attitudes toward risk on fairness and efficiency considerations are explored

asymmetric volatility in european day ahead power markets a comparative microeconomic analysis this paper uses high frequency spot price data from fourteen wholesale electricity markets in europe to analyze asymmetric volatility in european day ahead power markets with exponential garch e garch and tarch models our data set ranges from 1992 to 2015 and consists of approximately 926 000 observations as such this paper constitutes the most extensive and comprehensive work conducted so far on european power markets to the best of our knowledge unlike most of the literature that treats price as a continuous variable and attempts to model its trajectory this paper adopts a unique approach and regards each hour in a day a separate market the results show in post 2008 period the most expensive electricity is consumed in turkey ireland and uk while the cheapest power is in russia nordic countries and czech republic russia poland and czech republic have the least volatile markets while france ireland and portugal have the most volatile ones volatility has decreased in many european countries in post 2008 period besides we find magnitude effect is usually larger than the leverage effect meaning that the absolute value of price change is relatively more important than the sign of the change whether it is an increase or a decrease to explain volatility in european day ahead power markets moreover the results imply there is not a uniform inverse leverage effect in electricity prices that is price increases are more destabilizing in some european markets e g poland slovenia ireland netherlands than comparable price decreases but vice versa also holds true in some other countries e g portugal and france leverage or inverse leverage effect in post 2008 period is relatively stronger in portugal france and ireland but its impact is quite limited in turkey and germany furthermore although the impact of seasonality on prices is obvious a specific pattern cannot be identified finally large changes in the volatility will affect future volatilities for a relatively longer period of time in nordic countries ireland and the uk while changes in current volatility will have less effect on future volatilities in czech republic russia and turkey

fairness and social risk i unaggregated analyses this paper is the second of a two paper study of fairness issues for decisions that affect the benefits received and the risks encountered by a population the study examines fairness for individuals and for homogeneous groups within the population it considers fairness both for population benefit risk profiles and for probability distributions over profiles our study bases fairness on notions of envy among individuals and groups the first paper focused on fairness in profiles and profile distributions when benefits and risks are not aggregated the present paper uses individual preferences to assess fairness when benefits and risks are aggregated within groups or over the population it concentrates on intergroup envy measures and fairness indices that account for ways that aggregated benefits and risks might be allocated to members of groups or to groups within the population

membership has its privileges the socioeconomic characteristics of communist party members in urban china this article compares the relative importance of political capital in the form of membership in the chinese communist party and human capital in the form of higher education in urban china survey data from urban china strongly support two key elements of the intellectual new class theory intellectuals will have privileged access into the party and the importance of education relative to political reliability will increase over time the data also show how political capital and human capital are converted into high paying and prestigious jobs there is also evidence of a separate path of career mobility for the most socially prestigious jobs a college degree not a party card is the key economic reforms of the post mao era are creating a gap between political power on one hand and social prestige and economic power on the other this gap can be expected to grow as the reforms continue

technical note measuring equity in public risk an equitable distribution of risk is often an important criterion in the evaluation of technological and environmental risks in this paper we define the concept of equity precisely and develop measures for ex post and ex ante equity we then show how these measures combined with information on the number of possible fatalities can be used to rank alternatives that involve risks to human life

dispersive equity and social risk dispersive equity is concerned with the impact of life threatening risks from alternative policy decisions on homogeneous groups in a population it is not addressed to the disutility of various numbers of fatalities that might occur but rather to how fatalities are distributed over the groups although dispersive equity has long been recognized as an important component of some policy decisions it has received little formal treatment within the matrix of salient factors for such decisions our purpose is to advance its formal development this is done within a formulation based on probability distributions over potential fatality sets the formulation gives rise to four distinct but not independent equity concepts individual risk equity group risk equity dispersive equity and social outcome equity each of these is analyzed but special attention is given to dispersive equity the paper also comments on relationships between total equity and its four components and between total equity and the dis

equity considerations in utility based measures of health outcomes in economic appraisals an adjustment algorithm in this paper we consider whether methods currently used to measure utility of health outcomes are consistent with the equity criteria adopted by researchers we show that unless the chosen equity criterion is incorporated in the design of the measurement instrument the derived health state utilities are inconsistent with the equity criterion except under special circumstances adjustment algorithms are derived based on the axioms of von neumann morgenstern utility theory which take account of difference equity criteria currently adopted in the literature the proposed approach is based on simple lottery questions of the type already used widely in empirical studies

life satisfaction in urban china components and determinants survey data from urban china in 2002 show levels of life satisfaction to be low but not exceptionally so by international comparison many of the determinants of life satisfaction in urban china appear comparable to those for people in other countries these include inter alia unemployment income marriage sex health and age communist party membership and political participation raise life satisfaction people appear fairly satisfied with economic growth and low inflation and this contributes to their overall life satisfaction there is dissatisfaction over pollution but this like job insecurity does not appear to impact on life satisfaction

models as usual for unusual risks on the value of catastrophic climate change we study the role of alternative intertemporal preference representations in a model of economic growth stock pollutant and endogenous risk of catastrophic collapse we contrast the traditional discounted utility model which assumes risk neutrality with respect to intertemporal utility with a multiplicative choice model that displays risk aversion in that dimension first we show that both representations of preferences can rationalize the same business as usual economy for a given interest rate and no pollution externality second once we introduce a collapse risk whose hazard rate is a function of the pollution stock multiplicative preferences recommend a much more stringent policy response an illustration in the context of climate change indicates that switching to the multiplicative preference representation has a similar effect in terms of policy recommendations as scaling up the schedule of the hazard rate by a factor of 100

equity considerations in public risks evaluation recent contributions by r k sarin and r l keeney and r l winkler approach the problem of public risks evaluation from a multiattribute perspective in which fatalities ex ante equity and ex post equity play leading roles the present paper considers the same problem from the perspective of holistic comparisons between potential fatality distributions we consider a number of axioms for such comparisons identify maximally compatible sets of axioms and relate our approach to the multiattribute approach we also identify a form of dispersive equity that is not discussed in recent work but deserves further consideration

why did the west extend the franchise democracy inequality and growth in historical perspective during the nineteenth century most western societies extended voting rights a decision that led to unprecedented redistributive programs we argue that these political reforms can be viewed as strategic decisions by the political elite to prevent widespread social unrest and revolution political transition rather than redistribution under existing political institutions occurs because current transfers do not ensure future transfers while the extension of the franchise changes future political equilibria and acts as a commitment to redistribution our theory also offers a novel explanation for the kuznets curve in many western economies during this period with the fall in inequality following redistribution due to democratization i introduction the nineteenth century was a period of fundamental political reform and unprecedented changes in taxation and redistribution britain for example was transformed from an oligarchy run by an elite to a democracy the franchise was extended in 1832 and then again in 1867 and 1884 transferring voting rights to portions of the society with no previous political representation the decades after the political reforms witnessed radical social reforms increased taxation and the extension of education to the masses moreover as noted by kuznets inequality which was previously increasing started to decline during this period the gini coefficient for income inequality in england and wales had risen from 0 400 in 1823 to 0 627 in 1871 but fell to 0 443 in 1901 two key factors in the reduction in inequality were the increase in the proportion of skilled workers williamson 1985 and the redistribution of income toward the poorer segments of the society for example taxes rose from 8 12 percent of national product in 1867 to 18 8 percent by 1927 and the progressivity of the tax system increased substantially see lindert 1989

decision analysis models for social attitudes toward inequity social preferences for equity in the distribution of net benefits are not represented in a cost benefit study by the sum of the individuals net present values this paper presents two different decision analysts models for representing such an equity issue for each model conditions on the tradeoffs between different individuals are shown to imply that preferences can be represented by a special type of group value function procedures are presented by which such a group value function can be determined and used as part of a public policy evaluation

assessing risky social situations this paper reexamines the welfare economics of risk it singles out a class of criteria the expected equally distributed equivalent as the unique class that avoids serious drawbacks of existing approaches such criteria behave like ex post criteria when the final statistical distribution of well being is known ex ante and like ex ante criteria when risk generates no inequality the paper also provides a new result on the tension between inequality aversion and respect of individual ex ante preferences in the vein of harsanyi s aggregation theorem

catastrophe aversion and risk equity in an interdependent world catastrophe aversion and risk equity are important concepts both in risk management theory and practice keeney keeney rl 1980 equity and public risk oper res 28 3 527 534 was the first to formally define these concepts he demonstrated that the two concepts are always in conflict yet his result is based on the assumption that individual risks are independent it has therefore limited relevance for real world catastrophic events we extend keeney s result to dependent risks and derive the conditions under which more equity and more correlation between two risks imply a more catastrophic situation we then generalize some of the results for multiple correlated risks this paper was accepted by manell baucells decision analysis

attitudes toward catastrophe in light of climate change and other global threats policy commentators sometimes urge that society should be more concerned about catastrophes this paper reflects on what society s attitude toward low probability high impact events is or should be we first argue that catastrophe risk can be conceived of as a spread in the distribution of losses based on this conception we review studies from decision sciences psychology and behavioral economics that explore people s attitudes toward various social risks contray to popular belief we find more evidence against than in favor of catastrophe aversion the preference for a mean preserving contraction of the loss distribution and discuss a number of possible behavioral explanations next we turn to social choice theory and examine how various social welfare functions handle catastrophe risk we explain why catastrophe aversion may be in conflict with equity concerns and other regarding preferences finally we discuss current approaches to evaluate and regulate catastrophe risk