Human Development of Peoples

This paper provides a framework and estimates of Enrollment Rates per natural and combines them with previous Income and Child Mortality per natural estimates by Clemens and Pritchett (2008) to produce a Human Development Index Per Natural. The methodology is applied for 1990 and 2000 to provide estimates of growth rates of this measure over the period. The paper also develops and illustrates a framework for estimating an education place premium, and discusses how it is related to per natural measures. The peoples of the least developed countries stand to gain the most from international migration, but there are potentially significant gains to migration between developing countries as well.Migration, Human Development, Education

Human Development of Peoples

This paper provides a framework and estimates of Enrollment Rates per natural and combines them with previous Income and Child Mortality per natural estimates by Clemens and Pritchett (2008) to produce a Human Development Index Per Natural. The methodology is applied for 1990 and 2000 to provide estimates of growth rates of this measure over the period. The paper also develops and illustrates a framework for estimating an education place premium, and discusses how it is related to per natural measures. The peoples of the least developed countries stand to gain the most from international migration, but there are potentially significant gains to migration between developing countries as well.Migration, Human Development, Education

Trade Policy and Factor Prices: An Empirical Strategy

This paper presents a new empirical strategy for estimating the effects of trade policy on domestic factor prices when policy endogeneity is suspected. Absent income effectson factor supplies or domestic prices, the coefficient on the terms of trade can provide an unbiased estimator of the effect of trade barriers on the factor distribution of income for a small economy. In the more general case where income effects are allowed for, we provide a means to quantify and control for the possible bias. We implement our strategy on a cross-national data set of trade policies and income shares of capital and labor. We find little evidence of the existence of Stolper-Samuelson effects, both for the sample as a whole as well as within cones of diversification. Consistent with a model of wage bargaining, we find that the effect of openness on capital shares is greater for countries with higher unionization rates.Factor prices, trade policy, Stolper-Samuelson theorem, wage bargaining

Free Energy and the Generalized Optimality Equations for Sequential Decision Making

The free energy functional has recently been proposed as a variational principle for bounded rational decision-making, since it instantiates a natural trade-off between utility gains and information processing costs that can be axiomatically derived. Here we apply the free energy principle to general decision trees that include both adversarial and stochastic environments. We derive generalized sequential optimality equations that not only include the Bellman optimality equations as a limit case, but also lead to well-known decision-rules such as Expectimax, Minimax and Expectiminimax. We show how these decision-rules can be derived from a single free energy principle that assigns a resource parameter to each node in the decision tree. These resource parameters express a concrete computational cost that can be measured as the amount of samples that are needed from the distribution that belongs to each node. The free energy principle therefore provides the normative basis for generalized optimality equations that account for both adversarial and stochastic environments.Comment: 10 pages, 2 figure

An Adversarial Interpretation of Information-Theoretic Bounded Rationality

Recently, there has been a growing interest in modeling planning with information constraints. Accordingly, an agent maximizes a regularized expected utility known as the free energy, where the regularizer is given by the information divergence from a prior to a posterior policy. While this approach can be justified in various ways, including from statistical mechanics and information theory, it is still unclear how it relates to decision-making against adversarial environments. This connection has previously been suggested in work relating the free energy to risk-sensitive control and to extensive form games. Here, we show that a single-agent free energy optimization is equivalent to a game between the agent and an imaginary adversary. The adversary can, by paying an exponential penalty, generate costs that diminish the decision maker's payoffs. It turns out that the optimal strategy of the adversary consists in choosing costs so as to render the decision maker indifferent among its choices, which is a definining property of a Nash equilibrium, thus tightening the connection between free energy optimization and game theory.Comment: 7 pages, 4 figures. Proceedings of AAAI-1