social approval values and afdc a re examination of the illegitimacy debate this paper models the fertility decision of individuals who differ in their wage rate and their intensity of preferences for rearing children and whose utility of having a child out of wedlock depends on the level of social approval associated with doing so this social approval in turn is a function of the fraction of individuals in previous generations that chose to have children out of wedlock the model is a straightforward extension of the typical rational choice model that motivates much of the empirical literature a literature that has cast doubt on a strong link between afdc and illegitimacy however the model introduces elements from epidemic models that many have in mind when arguing for such a link as a result the predictions of this extended model are consistent with empirical findings while at the same time linking the rise in illegitimacy solely to government welfare programs specifically a program similar to afdc is introduced into an economy with low illegitimacy rates and a trans

social networks and technology adoption in northern mozambique despite their potentially strong impact on poverty agricultural innovations are often adopted slowly using a unique household dataset on sunflower adoption in mozambique we analyse whether and how individual adoption decisions depend upon the choices of others in the same social networks since farmers anticipate that they will share information with others we expect farmers to be more likely to adopt when they know many other adopters dynamic considerations however suggest that farmers who know many adopters might strategically delay adoption to free ride on the information gathered by others we present empirical evidence that shows that the relationship between the probability of adoption and the number of known adopters is shaped as an inverse u in line with information sharing the network effect is stronger for farmers who report discussing agriculture with others the data contains information which is needed to ameliorate the identification issues that commonly arise in this context in particular social networks are precisely identified and in addition we can control for village heterogeneity and endogenous group formation

social norms and moral hazard the probability of income loss depends on talent and effort effort has positive externalities and therefore individuals are awarded status in proportion to their perceived diligence the social no

pareto improvement and joint cash management optimisation for banks and cash in transit firms abstract improving the atm cash management techniques of banks has already received significant attention in the literature as a separate optimisation problem for banks and the independent firms that supply cash to automated teller machines this article concentrates instead on a further possibility of cost reduction optimising the cash management problem as one single problem doing so contractual prices between banks and the cash in transit firms can be in general modified allowing for further cost reduction relative to individual optimisations in order to show the pertinence of this procedure we have determined possible pareto improvement re contracting schemes based on a baumol type cash demand forecast for a hungarian commercial bank resulting in substantial cost reduction

the poverty assistance paradox we present a model of preferences on welfare transfers which incorporates the recipient s wealth as a signal of needs and deservingness we show that a paradox may arise the poorer the recipient is the less transfer he she will get implications might include the negative impact of targeting assistance to the poorest on public support for welfare

optimal taxation in the presence of tax evasion expected utility versus prospect theory abstract it is now well known that the predictions of expected utility theory eut applied to tax evasion are quantitatively and qualitatively at variance with the evidence while prospect theory pt makes the correct predictions in this literature the tax rate is exogenous we endogenize the tax rate and require that a successful theory should explain jointly the facts on the tax rate tax gap and the level of government expenditure we find that the data is best described by taxpayers using pt and the government using standard utility theory eut the results are robust to several possible alternative specifications we discuss how our results have a bearing on the debate between liberalism versus paternalism in behavioral economics we also propose an alternative explanation based on the notion of context dependent preferences

fairness and redistribution comment we provide an example that shows that in the alesina and angeletos 2005 model one can obtain multiplicity even if luck plays no role in the economy thus it is not critical that the noise to signal ratio be increasing in taxes or that desired taxes are increasing in the noise to signal ratio

social interaction effects in disability pension participation evidence from plant downsizing we estimate the magnitude of social interaction effects in disability pension participation among older workers in norway the problem of omitted variable bias is addressed using the exposure of an individual s neighbors to plant downsizing events as an instrument for the disability entry rate among the individual s previously employed neighbors our instrumental variable iv estimates suggest that an increase of one percentage point in the participation rate of previously employed neighbors increased the subsequent four year entry rate of older workers by about 0 4 percentage points numerous robustness and specification tests appear to support the validity of the identifying assumption in our iv strategy

the labour supply unemployment and participation of lone mothers in in work transfer programmes in work transfer schemes have recently been suggested as a device for encouraging labour force participation and reducing the severity of the disincentives associated with out of work income support schemes here we estimate a discrete choice labour supply model which allows for endogenous in work welfare programme participation we also allow for involuntary unemployment so as to distinguish between programme non participation and an inability to obtain work and thereby generate an eligibility to the programme

new evidence on the forward premium puzzle the forward premium anomaly exchange rate changes are negatively related to interest rate differentials is one of the most robust puzzles in financial economics we recast the underlying parity relation in terms of lagged forward interest rate differentials documenting a reversal of the anomalous sign on the coefficient in the traditional specification we show that this novel evidence is consistent with recent empirical models of exchange rates that imply exchange rate changes depend on two key variables the interest rate differential and the magnitude of the deviation of the current exchange rate from that implied by purchasing power parity

social image concerns and welfare take up abstract using a laboratory experiment we present first evidence that social image concerns causally reduce the take up of an individually beneficial transfer our design manipulates the informativeness of the take up decision by varying whether transfer eligibility is based on ability or luck and how the transfer is financed we find that subjects avoid the inference both of being low skilled ability stigma and of being willing to live off others free rider stigma using a placebo treatment we exclude other explanations for the observed stigma effects although stigma reduces take up elicitation of political preferences reveals that only a minority of taxpayers vote for the public transfer

why many eligible individuals choose not to go on welfare this article investigates why many eligible for welfare do not participate we show that on the job wage rising potential is the key factor motivating nonparticipation although individuals with very low earnings and little wage rising potential are typically welfare recipients those with good wage rising potential may choose to work participate in old age or never participate nonparticipation remains the best choice for eligible individuals with large wage rising potential even if universal old age social security is available we will also apply this model to a comprehensive welfare system in hong kong

the evolution of ideology fairness and redistribution ideas about what is fair influence preferences for redistribution we study the dynamic evolution of different economies in which redistributive policies perception of fairness inequality and growth are jointly determined we show how including beliefs about fairness can keep two otherwise identical countries on different development paths for a very long time we show how different initial conditions regarding how fair is the same level of inequality can lead to two permanently different steady states we also explore how bequest taxation can be an efficient way of redistributing wealth to correct unfair past accumulation of inequality

intergenerational correlations in labor market status a comparison of the united states and germany this paper uses data from the panel study of income dynamics and the german socioeconomic panel to calculate comparable measures of the intergenerational correlations of earnings hours and education in the us and germany the results indicate that there is remarkable similarity across the two countries in the correlations of earnings and of annual work hours of fathers and sons all of the correlations which involve women appear to be weaker in germany than the us perhaps due to the greater integration of women in the us into the labor market they find weak correlations in earnings and work hours for parent child pairs of different sexes in both countries they also find that intergenerational correlations in educational attainment are considerably stronger in the us authors

child labor cause consequence and cure with remarks on international labor standards although the literature on child labor is enormous it lacks a common theoretical foundation in this paper analytical survey of this field is provided keeping in mind that this is an area where the primary reason for theorizing is ultimately to influence policy overall it is noted that the literature on child labor is an illustration of abundance and anarchy although empirical writings on child labor are numerous they are not usually founded on theory it is argued that there is much that can be done in curbing the issue of child labor several theories were studied in this paper including collaborative intervention such efforts include public action which alters the economic environment such that the parents of their own accord prefer to withdraw the child from labor force another strategy involves the government a legal intervention is enforcing a total ban on the subject although such interventions have good intentions some of them may not be feasible in general it is better to take economy wide measures against child labor and if there is to be a sector specific ban it should be based on the working conditions of that sector rather than the destination of the goods

social mobility and redistributive politics just like economists voters have conflicting views about redistributive taxation because they estimate its incentive costs differently we model rational agents as trying to learn from their dynastic income mobility experience the relative importance of effort and predetermined factors in the generation of income inequality and therefore the magnitude of these incentive costs in the long run left wing dynasties believing less in individual effort and voting for more redistribution coexist with right wing dynasties this allows us to explain why individual mobility experience and not only current income matters for political attiitudes and how persistent differences in perceptions about social mobility can generate persistent differences in redistribution across countries

why do people pay taxes prospect theory versus expected utility theory abstract using actual probabilities of audit and penalty rates the return on evasion is 91 98 so why do not most of us evade existing analysis based on expected utility theory eut is unable to explain this furthermore and contrary to intuition and the bulk of evidence eut predicts that evasion should be decreasing in the tax rate yitzhaki puzzle we apply tversky and kahneman s tversky a kahneman d 1992 advances in prospect theory cumulative representation of uncertainty journal of risk and uncertainty 5 297 323 cumulative prospect theory to tax evasion we show that prospect theory provides a much more satisfactory account of tax evasion including an explanation of the yitzhaki puzzle this also provides independent confirmation of prospect theory

an economic model of welfare stigma perhaps the most basic assumption of the economic theory of consumer demand is that more is better than less virtually all of the major propositions of consumer theory can in a certain sense be derived from the assumption that goods are good interestingly however this tenet seems to be violated by the behavior of many individuals in the low income population for many turn out to be eligible for a positive welfare benefit but do not in fact join the welfare rolls for example it has been estimated that in 1970 only about 69 percent of the families eligible for afdc aid to families with dependent children participated in the program see richard michel 1980 the corresponding percentage for afdc u the program for which families with an unemployed male are eligible was only 43 percent and the participation rate in the food stamp program was only 38 percent see maurice mcdonald 1977 this phenomenon has puzzled many investigators because such individuals do not locate on the boundaries of their budget sets consequently most investigators ignore the problem when studying the effects of welfare programs on behavior in this paper this seemingly irrational rejection of an increase in income is modeled as resulting from welfare stigma that is from disutility arising from participation in a welfare program per se 1 the existence of stigma has been amply documented in the sociological literature patrick horan and patricia austin 1974 lee rainwater 1979 where interviews of recipients have often uncovered feelings of lack of self respect and negative self characterizations from participation in welfare nevertheless this phenomenon has not been modeled and many questions consequently remain when is the disutility of participation strong enough to prevent participation shouldn t we expect individuals to weigh the disutility of participation against the potential benefit in their decisions what is the elasticity of participation with respect to the potential benefit also in a slightly different vein how are the work disincentives of welfare affected by stigma these questions have been given scant attention by economists yet they are crucial for our ability to predict the impact of various welfare programs on the lowincome population here these questions are addressed by modeling nonparticipation as a utility maximizing decision the model is developed and estimated for the afdc program 2 the model posits an individual utility function containing not just disposable income but

income distribution and equilibrium multiplicity in a stigma based model of tax evasion abstract this paper incorporates continuous income distribution into the stigma based model of tax compliance the paper investigates the effect of income distribution on the existence of multiple equilibria and characterizes the conditions under which multiple equilibria emerge precisely multiple equilibria exist if taxpayer incomes are sufficiently homogeneous because the social coordination effect dominates the individual characteristics effect numerical simulations show that the main proposition is robust to allowing two step audit policies on the part of the tax agency under the presumption that the best or good equilibrium is selected whenever there are multiple equilibria as a byproduct the effect of various forms of tax reforms on the optimal two step audit policy the equilibrium compliance and fiscal revenue is analyzed

a socio economic model of stigma and related social problems abstract recent years have seen a rapid expansion of economic literature on stigma a notion that had been widely studied in sociology in relation to social deviance yet the economic literature overlooks the original sociological intuition that certain consequences of stigmatization could be socially inefficient this paper formalizes this intuition by developing a model of community behavior which mimics a classic sociological setting concerning the rehabilitation of a former criminal offender the conditions under which a socially inefficient equilibrium arises are derived some of those conditions are shown to be consistent with the findings from micro labor studies on crime

understanding welfare stigma taxpayer resentment and statistical discrimination abstract welfare stigma is widely regarded to be of central importance in understanding the impact of welfare programs in their goal of alleviating poverty it affects both the decision to take up benefits and the well being of those who actually do this paper develops alternative models of the determinants of welfare stigma we identify two views a statistical discrimination approach and a taxpayer resentment view we discuss how each may be formalized and derive their implications we then examine what they imply about the relationship between stigma and program design

belief in a just world and redistributive politics international surveys reveal wide differences between the views held in different countries concerning the causes of wealth or poverty and the extent to which people are responsible for their own fate at the same time social ethnographies and experiments by psychologists demonstrate individuals recurrent struggle with cognitive dissonance as they seek to maintain and pass on to their children a view of the world where effort ultimately pays off and everyone gets their just deserts this paper offers a model that helps explain i why most people feel such a need to believe in a just world ii why this need and therefore the prevalence of the belief varies considerably across countries iii the implications of this phenomenon for international differences in political ideology levels of redistribution labor supply aggregate income and popular perceptions of the poor the model shows in particular how complementarities arise endogenously between individuals desired beliefs or ideological choices resulting in two equilibria a first american equilibrium is characterized by a high prevalence of just world beliefs among the population and relatively laissez faire policies the other european equilibrium is characterized by more pessimism about the role of effort in economic outcomes and a more extensive welfare state more generally the paper develops a theory of collective beliefs and motivated cognitions including those concerning money consumption and happiness as well as religion

analyzing the length of welfare spells abstract this paper studies the determinants of the length of individual spells of welfare focusing on how the length of a spell affects the probability of its termination the analysis utilizes six years of monthly data on time spent in the afdc program among female household heads a variety of duration dependence models are estimated monthly afdc participation does not show strong evidence of duration dependence two distinct groups appear to utilize welfare one with a very low and constant probability of leaving welfare and a second group which is more affected by time on the program

the persistence of subjective poverty in urban ethiopia using panel data spanning 15 years this paper investigates the persistence and correlates of subjective and consumption poverty in urban ethiopia despite the decline in consumption poverty in recent years which has been linked to rapid economic growth subjective poverty has remained largely unchanged dynamic probit regression results show that households with a history of past poverty continue to perceive themselves as poor even if their material consumption improves our results also suggest that the relative economic position of households is a strong determinant of subjective poverty and having at least some type of employment reduces the likelihood that households will perceive themselves as poor even if they remain in objective poverty receiving remittances from abroad on the other hand does not reduce perceived poverty even if it raises material consumption we argue that any analysis to measure the impact of growth on welfare should encompass subjective measures as well

on limiting the market for status signals abstract in many societies individuals care how others view them in their efforts to impress such individuals engage in consumption signals which attempt to establish higher levels of status than their true status type this leads to an inefficiency which offers the possibility of a pareto improving tax policy the impacts of tax policy and benefits on the signalling equilibrium are considered

anomalies foreign exchange most all behavior can be explained by assuming that agents have stable well defined preferences and make rational choices consistent with those preferences in markets that eventually clear an empirical result qualifies as an anomaly if it is difficult to rationalize or if implausible assumptions are necessary to explain it within the paradigm this column will present a series of such anomalies readers are invited to suggest topics for future columns by sending a note with some reference to or better yet copies of the relevant research comments on anomalies printed here are also welcome the address

generalized social marginal welfare weights for optimal tax theory this paper proposes to evaluate tax reforms by aggregating money metric losses and gains of different individuals using generalized social marginal welfare weights optimum tax formulas take the same form as standard welfarist tax formulas by simply substitut ing standard marginal social welfare weights with those generalized weights weights directly capture society s concerns for fairness without being necessarily tied to individual utilities suitable weights can help reconcile discrepancies between the welfarist approach and actual tax practice as well as unify in an operational way the most prominent alternatives to utilitarianism such as libertarianism equality of opportunity or poverty alleviation jel d60 d63 h21 h23 i38

asymmetry in forward exchange rate bias a puzzling result abstract in this paper we document that the hypothesis that the forward exchange rate discount is an unbiased predictor of future currency depreciation holds in periods when the forward us dollar is quoted at a premium against the japanese yen and the deutschmark but fails when it is quoted at a discount for the post bretton woods floating exchange rate era moreover the observed asymmetry is statistically significant this puzzling result remains to be explained

network effects and welfare cultures we empirically examine the role of social networks in welfare participation using data on language spoken at home to better infer networks within an area our empirical strategy asks whether being surrounded by others who speak the same language increases welfare use more for those from high welfare using language groups this methodology allows us to include local area and language group fixed effects and to control for the direct effect of being surrounded by one s language group these controls eliminate many of the problems in previous studies the results strongly confirm the importance of networks in welfare participation

the forward bias is it a money tree abstract this paper examines the forward discount anomaly i e the fact that the forward exchange rate is a biased predictor of the future spot rate we run a series of rolling regressions which we use to predict the value of the future spot rate based upon this bias we show that the average return from an investment strategy based on the bias in forward exchange rates is in many cases insignificantly different from zero in other cases however the return is significantly positive hence the in sample bias does not necessarily lead to a money making strategy for all currencies

conditioning carry trades less risk more return abstract prior studies show that extreme interest rate differentials irds and high foreign exchange rate fx volatility have substantial explanatory power for the validity of uip we show that these contemporaneous drivers also have predictive power by implementing a conditional currency carry trade ct strategy that excludes regimes for which uip is likely to hold conditioning high fx volatility only or on both fx volatility and extreme irds outperforms the base case unconditional ct strategy in virtually any of the settings analyzed conditioning on very large irds only shows mixed findings our strategy works best for smaller ct portfolios

fairness and redistribution reply this paper responds to the comment of di tella and dubra 2013 we first clarify that the model of alesina and angeletos 2005 admits two distinct types of multiplicity one that is at the core of their contribution and a separate one that is at work in di tella and dubra s example we then proceed to show how alesina and angeletos s results are robust to alternative specifications of the voting mechanism

corruption tax evasion and social values we provide a theoretical explanation for the vicious circle of political corruption and tax evasion in which countries often fall into we address this issue in the context of a model with two distinct groups of agents citizens and politicians citizens decide the fraction of their income for which they evade taxes politicians decide the fraction of the public budget that they peculate we show that multiple self fulfilling equilibria with different levels of corruption can emerge based on the existence of strategic complementarities indicating that corruption may corrupt furthermore we find that standard deterrence policies cannot eliminate the multiplicity of equilibria instead policies that impose a strong moral cost on tax evaders and corrupt politicians can lead to a unique equilibrium

modeling of financial supply chain the research work on supply chain management has primarily focused on the study of materials flow and very little work has been done on the study of upstream flow of money in this paper we study the flow of money in a supply chain from the viewpoint of a supply chain partner who receives money from the downstream partners and makes payments to the upstream partners the objective is to schedule all payments within the constraints of the receipt of the money a penalty is to be paid if payments are not made within the specified time any unused money in a given period can be invested to earn an interest the problem is computationally complex and non intuitive because of its dynamic nature the incoming and outgoing monetary flows never stop and are sometimes unpredictable for tractability purposes we first develop an integer programming model to represent the static problem where monetary in flows and out flows are known before hand we demonstrate that even the static problem is np complete first we develop a heuristic to solve this static problem next the insights derived from the static problem analysis are used to develop two heuristics to solve the various level of dynamism of the problem the performances of all these heuristics are measured and presented

geographical targeting for poverty alleviation an introduction to the special issue in the face of rising public deficits and shrinking public resources geographical targeting may be a viable way to allocate resources for poverty alleviation in developing countries efficiency can be increased and leakage to the non poor reduced substantially by targeting increasingly smaller areas this article and more generally the symposium on geographical targeting for poverty alleviation proposes several techniques for augmenting data to produce more detailed poverty maps it focuses on practical considerations in the design of geographically targeted poverty alleviation programs in particular it assesses the advantages and disadvantages of geographical targeting and describes how geographic information systems can be applied to improve poverty mapping

takeup social multipliers and optimal social insurance abstract this paper examines the optimal provision of unemployment insurance ui in a framework that accounts for behavioral responses along both the intensive and extensive margins two formulations of takeup are considered in the first individuals face a takeup cost that is exogenous in the second the cost depends endogenously on the takeup rate such endogenous costs to takeup lead to a social multiplier a reduced form parameter summarizing the strength of social interactions this paper derives a formula for the optimal replacement rate in terms of the takeup and duration elasticities and the social multiplier the formula is applied by estimating the social multiplier using policy variation in ui benefit levels the results suggest that social multiplier effects account for 35 of the total effect of ui on takeup and yield an optimal replacement rate around 60 of pre unemployment wages 20 higher than previous estimates

conspicuous conservation the prius halo and willingness to pay for environmental bona fides abstract this paper develops a theory of conspicuous conservation a phenomenon related to conspicuous consumption in which individuals seek status through displays of austerity amid growing concern about environmental protection we identify a statistically and economically significant conspicuous conservation effect in vehicle purchase decisions and estimate a mean willingness to pay for the green signal provided by the distinctively designed toyota prius in the range of 430 4200 depending upon the owner s location results are related to the growing literature on green markets and suggest that policy should target less conspicuous conservation investments that will be under provided relative to those that confer a status benefit

reconsidering the effect of welfare stigma on unemployment abstract stigma has been modeled in the literature as a cost of welfare participation providing a disincentive to welfare entry hence traditional models predict that stigma leads to higher search effort and higher employment we develop a more comprehensive model that accounts for the fact that welfare stigma may elicit psychological effects and foster negative attitudes towards welfare recipients affecting their employment prospects we find two contrasting effects the first reinforces the standard prediction rational individuals foreseeing the reduction in employability defer welfare entry deterrence effect the second goes in the opposite direction once assisted individuals experience less welfare to employment transitions both because of reduced search effectiveness and of reduced search effort entrapment effect when stigma is not too high the latter effect prevails more stigma yields to less employment and more welfare participation the result is stronger if individuals are not able to foresee their loss of employability

forward premiums as unbiased predictors of future currency depreciation a non parametric analysis abstract a large body of literature employing regression analysis has reported that the forward premium is not an unbiased predictor of future currency depreciation many studies argue that the forward market unbiasedness hypothesis may be falsely rejected due to biased parameter estimates possible sources of bias include the existence of a time varying risk premium systematic forecast errors and measurement errors this paper investigates whether the forward premium can predict the direction of change in the future spot exchange rate using a distribution free non parametric approach our tests strongly reject the unbiasedness hypothesis and conclude that the forward premium contains either no information or the wrong information about future currency depreciation

social norms and economic incentives in firms abstract this paper studies the interplay between economic incentives and social norms in firms we introduce a general framework to model social norms arguing that norms stem from agents desire for or peer pressure towards social efficiency in a simple model of team production we examine the interplay of three types of contracts with social norms we show that one and the same norm can be output increasing neutral or output decreasing depending on the contract multiplicity of equilibria and crowding out effects of steeper incentives can arise

a reconsideration of the uncovered interest parity relationship abstract this paper argues that the uncovered interest parity uip relationship is distinct from and more important than the unbiasedness of forward exchange rates as predictors of future spot rates the standard finding that the slope estimate b is roughly 3 in regressions of s t on t 1 s t 1 implies rejection of unbiasedness but not necessarily uip the hypothesis that monetary authorities manage interest rates so as to smooth their movements while also resisting changes in exchange rates is attractive conceptually and is capable of explaining not only the b 3 finding but also several other notable features of the data

a game theoretic approach to cash management the cash management function is a general designation for two distinct corporate activities cash flow acceleration and liquidity account allocation the former problem concerns procedures for speeding cash collections from customers and slowing cash disbursements to suppliers so as to optimize the firm s use of cash the latter problem on the other hand takes the firm s cash flow as given and determines the minimum cash balance the excess to be held in the form of marketable securities although a well developed literature exists for the liquidity account allocation problem e g baumol 1952 tobin 1956 miller and orr 1966 eppen and fama 1968 analysis of the cash flow acceleration problem has been less extensive some papers examine techniques for speeding cash collections such as lock box systems e g kraus janssen and mcadams 1970 while others explore methods for slowing cash disbursements such as remote disbursement systems e g gitman forrester and forrester 1976 but no one has investigated the interaction of the two this is a serious deficiency because as a practical matter firms simultaneously utilize both types of procedures so that the cash management efforts of other firms tend to counteract each firm s own efforts an inherently

optimal redistribution with endogenous social norms in this paper we examine the effect of social norms on redistributive policies where social norms are reflected in the degree of work participation among the different skill classes participation is driven both by the material incentives and heterogeneous preferences for leisure of each skill class and by an endogenous social norm results for optimal redistributive taxation show that when the social norm enters as a benefit or cost for participants participation taxes are generally lower than in its absence multiple participation equilibria can occur and an engineered shift from a low to a high participation equilibrium can be pareto improving in the long run

social norms and welfare state dynamics the paper analyses the interaction between economic incentives and work norms in the context of social insurance if the work norm is endogenous in the sense that it is weaker when the population share of beneficiaries is higher then voters will choose less generous benefits than otherwise we also discuss welfare state dynamics when there is a time lag in the adjustment of the norm in response to changes in this population share and show how a temporary shift in the unemployment rate may cause persistence in the number of benefi

does egalitarianism have a future the fall of communism the reassessment of nordic social democracy belt tightening in other advanced welfare states and the worldwide privatization wave have led many to conclude that egalitarianism is a merely utopian ideal the possibility of whose realization is laid to rest by the failure of a series of twentieth century social experiments we survey the evidence both empirical and theoretical and conclude that obituaries are premature key theoretical errors in the design of egalitarian experiments and in some critiques of pro egalitarian policies concern the role of information asymmetries and we argue that their proper understanding re opens possibilities for increasing equality without unacceptable sacrifices in efficiency