A complete model for welfare analysis

Taking advantage of some of the lessons learned from income inequality comparisons over time and/or across space, we provide a complete framework of analysis to compare the social or aggregate welfare of independent cross-sections of household income and non-income household characteristics.This framework serves to clarify a number of traditional issues on i) the proper domain of the social evaluation problem; ii) the need to consider alternative mean invariant inequality notions; iii) the decomposition of changes in real welfare into changes of the mean at constant prices and changes in real inequality; iv) the nature of the interhousehold welfare comparability assumptions implicit in all empirical wok, and v) the strong implications of separability assumptions necessary for inequality and welfare decomposition by population subgroups. This review essay, written with an operational aim in mind, extends and updates the treatment found, for example, in Deaton and Muellbauer (1980). The main novelty is the analysis of the simplifying implications of the condition that income adjustment procedures for taking into account non-income needs are independent of household utility levelsan assumption originally introduced in the theoretical literature by Lewbel (1989) and Blackorby and Donaldson (1989), which is extended here to the absolute case

A complete model for welfare analysis.

Taking advantage of some of the lessons learned from income inequality comparisons over time and/or across space, we provide a complete framework of analysis to compare the social or aggregate welfare of independent cross-sections of household income and non-income household characteristics.This framework serves to clarify a number of traditional issues on i) the proper domain of the social evaluation problem; ii) the need to consider alternative mean invariant inequality notions; iii) the decomposition of changes in real welfare into changes of the mean at constant prices and changes in real inequality; iv) the nature of the interhousehold welfare comparability assumptions implicit in all empirical wok, and v) the strong implications of separability assumptions necessary for inequality and welfare decomposition by population subgroups. This review essay, written with an operational aim in mind, extends and updates the treatment found, for example, in Deaton and Muellbauer (1980). The main novelty is the analysis of the simplifying implications of the condition that income adjustment procedures for taking into account non-income needs are independent of household utility levelsan assumption originally introduced in the theoretical literature by Lewbel (1989) and Blackorby and Donaldson (1989), which is extended here to the absolute case.Welfare; Inequality; Equivalence scales; descomposition by population subgroups;

Exploring the consistency of the SF-6D

Objective: The six dimensional health state short form (SF-6D) was designed to be derived from the short-form 36 health survey (SF-36). The purpose of this research was to compare the SF-6D index values generated from the SF 36 (SF-6D(SF-36)) with those obtained from the SF-6D administered as an independent instrument (SF-6D(Ind)). The goal was to assess the consistency of respondents answers to these two methods of deriving the SF-6D. Methods: Data were obtained from a sample of the Portuguese population (n = 414). Agreement between the instruments was assessed on the basis of a descriptive system and their indexes. The analysis of the descriptive system was performed by using a global consistency index and an identically classified index. Agreement was also explored by using correlation coefficients. Parametric tests were used to identify differences between the indexes. Regression models were estimated to understand the relationship between them. Results: The SF-6D(Ind) generates higher values than does the SF-6D(SF-36), There were significant differences between the indexes across sociodemographic groups. There was a significant ceiling effect in the SF-6D(Ind) a but not in the SF-6D(SF-36). The correlation between the indexes was high but less than what was anticipated. The global consistency index identified the dimensions with larger differences. Considerable differences were found in two dimensions, possibly as a result of different item contexts. Further research is needed to fully understand the role of the different layouts and the length of the questionnaires in the respondents' answers. Conclusions: The results show that as the SF-6D was designed to derive utilities from the SF-36 it should be used in this way and not as an independent instrument.Fundacao para a Ciencia e a Tecnologia (FCT

The Relationship Between Risk Attitudes and Heuristics in Search Tasks: A Laboratory Experiment

Experimental studies of search behavior suggest that individuals stop searching earlier than predicted by the optimal, risk-neutral stopping rule. Such behavior could be generated by two different classes of decision rules: rules that are optimal conditional on utility functions departing from risk neutrality, or heuristics derived from limited cognitive processing capacities and satisfycing. To discriminate among these two possibilities, we conduct an experiment that consists of a standard search task as well as a lottery task designed to elicit utility functions. We find that search heuristics are not related to measures of risk aversion, but to measures of loss aversion

Comparing incomes when needs differ: equivalisation for the extra costs of disability in the UK

Equivalisation of incomes for household size and composition is accepted practice when measuring poverty and inequality; adjustments to take account of other variations in needs are rarely made. This paper explores the financial implications of one possible source of additional needs: disability. Using two UK household surveys, we seek to establish whether there are extra costs of living associated with disability, and to quantify them using the ¿standard of living¿ approach. The underlying theory is that a household¿s standard of living is a function of income and needs. The extra costs of disability can be derived by comparing the standard of living of households with and without disabled members at a given income, having controlled for other sources of variation. Results show that the extra costs of disability are substantial, especially for disabled people living alone, and that these costs rise with severity of disability. To bring out the policy implications of these results, we compare and contrast three different income distributions which differ in their adjustment for the extra costs of disability, for the population as a whole and for various subgroups. We find that unadjusted incomes significantly understate the problem of low income amongst disabled people, and thereby in the population as a whole

Profound vision loss impairs psychological well-being in young and middle-aged individuals.

PurposeThe aim of this study was to evaluate the effects of profound vision loss on psychological well-being in adolescents, young adults, and middle-aged adults with regard to mood, interpersonal interactions, and career-related goals. In addition, we assessed the significance of the resources that may be used to enhance psychological well-being in cases of profound vision loss, and in particular, examined the utility of low vision aids and the role of the ophthalmologist as a provider of emotional support.MethodsA questionnaire was issued to individuals aged 13-65 years with profound vision loss resulting from Leber's hereditary optic neuropathy (LHON). Depression prevalence was evaluated with questions regarding major depressive disorder symptomatology. Participants appraised the effects of vision loss on their interpersonal interactions and career goals by providing an impact rating (IR) on a 21-point psychometric scale from -10 to +10. Social well-being index was defined as the average of interpersonal IR and career IR. Subjects were additionally asked about the use of low vision aids and sources of emotional support.ResultsA total of 103 participants (mean age =26.4±11.2 years at LHON diagnosis; mean ± standard deviation) completed the questionnaire. Nearly half (49.5%) met the depression criteria after vision loss. Negative impacts on interpersonal interactions (median IR = -5) and career goals (median IR = -6) were observed; both ratings were worse (P<0.001) for depressed versus nondepressed subjects. Older age at diagnosis corresponded to higher depression prevalence and increased incidence of negative interpersonal IR and career IR. Sixty-eight percent of subjects used electronic vision aids; controlling for age, social well-being index was higher among these individuals than for those who did not use electronic aids (P=0.03). Over half of the participants (52.4%) asserted that they derived emotional support from their ophthalmologist.ConclusionProfound vision loss in adolescents, young adults, and middle-aged adults is associated with significant negative psychological and psychosocial effects, which are influenced by age and use of electronic vision aids. Ophthalmologists, in addition to managing vision loss, may serve an important role in the emotional adaptation of these patients