Do Social Relations Affect Economic Welfare? A Microeconomic Empirical Analysis

Over the last few years, many studies have shown that social networks affect the socioeconomic development. This paper presents evidence, through the Italian microdata representative of the entire Italian population, that the quality and quantity of interpersonal relations of agents can increase their economic welfare. Two proxies of interpersonal relations at an individual level are considered: a proxy for the density and one for the quality of network structure of personal contacts. Both seem to have a positive effect on the level of household economic welfare of agents. This result proves robust to the inclusion of a variety of control variables and to the use of different econometric methods.Networks, Social Interactions, Household Economic Welfare, Microdata, Fuzzy Logic

Forecasting Unemployment Rate Using a Neural Network with Fuzzy Inference System

Greece is a low-productivity economy with an ineffective welfare state, relying almost exclusively on low wages and social transfers. Failure to come to terms with this reality hampers both the appropriateness of EU recommendations and the Greek government's capacity to deal with unemployment. Rather than finding a job in a family business or through relationship contacts, young people stay unemployed. Nor can people move back to their village of origin so easily. The underground economy, and the mass of small companies which characterize the Greek economy are booming, on paper. One in three members of the workforce are "self-employed", compared to one in seven in the EU as a whole. (International Viewpoint) An unemployed person in Greece is 2,15 times more likely to suffer poverty than a person in employment. Yet in Greece there are perhaps even more influential factors in determining increased risk of poverty. Thus while unemployment is a crucial factor in the risk of poverty, it is neither the only nor the most significant factor. The paper presents a new technique in the field of unemployment modeling in order to forecast unemployment index. Techniques from the Artificial Neural Networks and from fuzzy logic have been combined to generate a neuro-fuzzy model. The input is a time series. Classical statistics measures are calculated in order to asses the model performance. Further the results are compared with an ARMA and an AR model.forecasting, neural network, unemployment

Devolution as a means to adequate social safety nets?

Decentralisation is invariably among the recommendations that international organisations such as the World Bank make for an enhancement of social provisions, and particularly a better targeting of social assistance regimes, in Eastern and Central Europe. However, theoretical literature as wel as empirical research suggests that decentralisation is not by defintion a panacea, especially when it concerns the transfers of competencies in the matter of social protection systems. It is true that there are arguments to promote redistributive activity at lower levels of government but whith regard to policies aimed at redistribution and reducing poverty (and welfare generosity) the assumption that redistribution is best organised at the central level is rather dominant. Fundamental constraints on redistribution by lower level governments would -according to this line of reasoning- facilitate a 'race to the bottom'. This paper investigates the relationship between the generosity of social assistance benefits and several dimensions of decentralisation (the administration, decision-making and funding of social assistance schemes) at two levels of government (the substate and the local level) in 21 OECD countries by means of a fuzzy set analysis. The results indicate that social asssitance benefits are more adequate in countries where the decision-making, funding and administration of social assistance schemes is controlled by the central government and in countries where central or substate governments set the basic social assistance rates and housing benefits while sharing funding liabilities with the local government level. When Central and Eastern European countries opt for decentralisation as an instrument of poverty alleviation – through a better targeting of benefits -, prudence is called for the fact that there might be a trade-off between the transfer of competencies to lowel levels of government and the generosity of welfare programmes.decentralization; devolution; social policy; social assistance; Europe; OECD; Fuzzy Set; social welfare; race to the bottom; federalism

Multi-Dimensional Analysis of Poverty in Ghana Using Fuzzy Sets Theory

The paper studies the multidimensional aspects of poverty and living conditions in Ghana. The aim is to fill the vacuum that has been left by traditional uni-dimensional measures of deprivation based on poverty lines, exclusively estimated on the basis of monetary variables such as income or consumption expenditure. It combines monetary and non-monetary, and qualitative and quantitative indicators, including housing conditions, the possession of durable goods, equivalent disposable income, and equivalent expenditure, with a number of composite human welfare measures. The study employs the fuzzy-set theoretic framework to compare levels of deprivation in Ghana over time usig micro data from the last two rounds of the Ghana Living Standard Surveys (1991/1992 and 1998/1999). The estimation results of the membership functions, depicting the levels of deprivation for the various categories of deprivation indicators, show a composite deprivation degree of 0.2137 for the whole country in 1998/99 as compared to 0.2123 in 1991/92. This deprivation trend reveals that poverty levels hard scarcely changed in Ghana. In fact, it even rose slightly during the nineties, contrary to the uni-dimensional analytical GLSS 4 report of an overall broadly favourable trend in poverty in Ghana during the 1990s.Ghana, fuzzy set, multi-dimensional poverty, composite deprivation or poverty index

Multidimensional Poverty Comparisons within Europe. Evidence from the European Community Household Panel

This paper is a cross-sectional study on multidimensional poverty comparisons among the European Union countries, based on data provided by the European Community Household Panel (ECHP). In addition to the empirical results and the methodological problems, the study underlines the opportunities and the difficulties met while using the ECHP. The extended concept of poverty is relative and multidimensional and it reflects not only the financial aspects, but also dimensions like family composition, leisure, subjective deprivation, social participation, durable goods, housing conditions, access to education. Hence, it requires comparative assessments through ordinal measures. In order to compare the multidimensional poverty in 1999 and in a time interval (1994-1999), we have applied the Totally Fuzzy and Relative Method (TFR) in two forms: original (Cheli and Lemmi, 1995) and alternative (Cheli, D’Agostino and Filippone, 2001). The research reveals the hierarchy of countries according to different indicators of poverty. Although the rankings given by the two methods are similar in some parts, there are differences establishing the issues which arise when different features of deprivation are aggregated into a collective index. We show that the variables taken into account, the method and its interpretability, the data and the national particularities, they all have a big influence on the relative and comparative measurement of poverty.multidimensional poverty ; fuzzy set theory ; poverty comparisons ; poverty measurement ; well-being assessment

Quality of Life in Europe: Empirical evidence

This report is one of the outputs resulting from Workpackage 4, "Social and professional integration" of the WALQING project, SSH-CT-2009-244597 (www.walqing.eu).

Weights in multidimensional indices of well-being: an overview

Multidimensional indices are becoming increasingly important instruments to assess the well-being of societies. They move beyond the focus on a single indicator and yet, are easy to present and communicate. A crucial step in the construction of a multidimensional index of well-being is the selection of the relative weights for the different dimensions. The aim of this paper is to study the role of these weights and to critically survey eight different approaches to set them. We categorize the approaches in three classes: data-driven, normative and hybrid weighting, and compare their respective advantages and drawbacks.composite indicator, multidimensional well-being index, weights.

Factor Analysis vs. Fuzzy Sets Theory: Assessing the Influence of Different Techniques on Sen's Functioning Approach

This paper explores a couple of specific operational interpretations of Sen's approach in view of assessing the extent to which the results originated by the implementation of Sen's concepts are influenced by the choice of the specific technique. By means of a survey based on a representative sample of Belgian individuals, seven achieved functioning's are identified via each technique and subsequently confronted. To structure the information and to facilitate comparisons, standard multivariate analysis is performed, while at the same time considering in more detail the sub-group of the most deprived individuals. In this way, a substantial accordance - yet no perfect equivalence - is uncovered in the general patterns of functionings' achievements.

Multidimensional Poverty Rankings based on Pareto Principle: A Practical Extension

This paper proposes a ranking method of multidimensional poverty and extends it aiming to enhance its practical utility. While our original ranking method that assumes non-comparability among different dimensions of poverty succeeds in eliminating some implicit arbitrariness in existing ranking, it also confronts a disadvantage that a non- negligible number of objectives (countries) are ranked at the same level. In order to improve this disadvantage, we propose an extended ranking method, where we allow the data to have a certain range of bandwidth. The introduction of bandwidth improves the usefulness of our ranking in the sense that it decreases the number of countries with the same rank. In addition, a simulation exercise shows that this extension also improves the robustness of the ranking against measurement errors.