Measuring equality of opportunity by Shapley value

Equality of opportunity is a political ideal which requires that ex-ante inequalities, and only those inequalities, should be eliminated. Justice requires leveling the playing field by rendering everyone's opportunities equal in an appropriate sense, and then letting individual choices and their effects dictate further outcomes. In this paper we propose a methodology to decompose the path-independent Atkinson index of equality through Shapley value seeking for a measure of overall inequality produced by the marginal contributions of the opportunity and the responsibility component.Equality of opportunity, Shapley decomposition, Atkinson index, path independency.

Inequality of Opportunity in the Credit Market

Credit market imperfections can prevent the poor from making profitable investments. Under asymmetric information observable features, such as wealth and collateral, play an important role in determining who gets credit, in violation of the Equality of Opportunity principle. We define equality of opportunity as the equal possibility of getting credit for a given aversion to effort. We first establish that, due to larger cross subsidization in high collateral classes of borrow- ers, richer individuals are more likely to get credit for a given aversion to effort. Our second result is that Inequality of Opportunity is associated with an inefficient allocation of resources among classes of borrowers. The marginal borrower in classes that post more collateral exerts less effort in equilibrium (and therefore produces lower aggregate surplus) than the marginal borrower in lower collateral classes. This suggests that public credit policies should be targeted at poorer classes of would be borrowers both for equity and efficiency reasons, which rarely occurs in practice.equality of opportunity; credit; moral hazard; crosssubsidization; collateral

Inequality of opportunity in the credit market

Credit market imperfections can prevent the poor from making pro table investments. Under asymmetric information observable features, such as wealth and collateral, play an important role in determining who gets credit, in violation of the Equality of Opportunity principle. We de ne equality of opportunity as the equal possibility of getting credit for a given aversion to e¤ort. We rst establish that, due to larger cross subsidization in high collateral classes of borrowers, richer individuals are more likely to get credit for a given aversion to e¤ort. Our second result is that Inequality of Opportunity is associated with an ine¢ cient allocation of resources among classes of borrowers. The marginal borrower in classes that post more collateral exerts less e¤ort in equilibrium (and therefore produces lower aggregate surplus) than the marginal borrower in lower collateral classes. This suggests that public credit policies should be targeted at poorer classes of would be borrowers both for equity and e¢ ciency reasons, which rarely occurs in practice.equality of opportunity; credit; moral hazard; cross subsidization; collateral.

Wealth inequality, unequal opportunities and inefficient credit market

This paper investigates the impact of heterogeneous wealth on credit allocation from an egalitarian opportunity and an efficiency point of view. Under asymmetric information on both wealth and the responsibility variable there is no trade-off between equality and efficiency, actually wealth inequality delivers both inequality of opportunity and inefficiency. Due to decreasing absolute risk aversion, poor entrepreneurs, other things equal, realize better projects. This notwithstanding, due to the bidimensional hidden information, they may be rationed out or obtain a loan only at the cost of cross subsidizing bad projects realized by rich entrepreneurs. In the first case inefficiency arises in the form of insufficient investment, in the second in the form of inefficient projects being realized. An egalitarian redistribution of endowments may lead to perfect screening, no inefficiencies in the allocation of credit and equality of opportunity

A multi-factor inequality approach to a transfer scheme: the case of Common Agricultural Policy

The purpose of this paper is to propose theoretical foundations on the impact of transfer scheme, e.g. Community Agricultural Policy, on income inequality within European Countries. First, we show that ex-post inequality (in the after-transfer distribution) may increase if either initial aggregate income or the amount of fiscal contributions are sufficiently high. Second according to welfare ordering, we characterize a multi-factor decomposition of the Atkinson index to gauge the impact of each income source on the inequality profile. Third, we introduce a methodology to construct a cooperative game played by different income factors (as net incomes and/or incoming transfers) explicitly measuring the cost of inequality across the population in terms of welfare loss. We finally rely on Banzhaf and Shapley values to determine the marginal contributions of each factor to overall inequality

NIMBY Clout on the 2011 Italian Nuclear Referendum

This paper claims that the 2011 Italian referendum on nuclear power is taking shape as a clean laboratory for the measurement of one of the main aspects of the NIMBY (Not In My BackYard) issue. Since the citizens voted on the possibility for the government to set up new nuclear plants in well-known sites, we identify community preferences for their locations across Italian municipalities using the turnout rate. The Fukushima nuclear disaster that happened a few months before the referendum may have magnified negative attitudes toward nuclear power. Thus, taking into account regional and political features that may influence ideological aversion to nuclear power, we still find highly negative correlation between distance from nuclear sites and the turnout rate

One more in my backyard? Insights from the 2011 Italian nuclear referendum

This paper investigates the 2011 Italian referendum on nuclear power as a clean laboratory for recovering information on the spatial pattern of votes about the construction (or restoration) of nuclear facilities. Our results show that voting preferences on building nuclear facilities are sensible to proximity determined by a strong local component. Voters’opposition to nuclear installments tends to be even higher when the effect of both existing and proposed plants is taken into account. The study tracks the changes of risk perception and voting preferences finding a positive correlation between the distance-related perceived nuclear risk and the share of participation against nuclear power. The perceived risk and the consequent voting pattern are even higher in communities close to proposed nuclear plants compared to the existing ones. This holds even after taking into account local, regional and political features and several municipality characteristics which may influence preferences over nuclear power

Theocracy and Resilience Against Economic Sanctions

This paper provides a simply theory to explain the impact of sanctions on a regime's policies and behavior. Sanctions are generally put to strip the target country from its available rents and weaken the government's stance against growing discontent in the population. We show however that sanctions may give legitimacy to an incumbent government by influencing the optimal level of religious ideology provided by the state and further stabilizing its grip to power and rents. While in a good state of nature sanctions build resilience as long as religious ideology among the population is strong, at bad times they compel the target country to move towards ideological moderation. In a world of asymmetric information, the target country always finds it optimal to send an accurate signal in order to successfully convince the imposing side to lift sanctions and reach a win-win outcome

Learning, proximity and voting: theory and empirical evidence from nuclear referenda

This paper presents novel evidence on the pattern of voting in referenda and develops a spatial learning model that helps explain such behavior. In particular, we shed light on the determinants of voters’ choices over nuclear power using data on two Italian referenda. Exploiting the panel structure of the data, we document that voting against nuclear power increases, whenever the distance from the closest nuclear plant decreases. However, we detect a different voting behavior between municipalities close to existing reactors and those close to proposed ones. A possible explanation is that many citizens hold more precise information on nuclear safety because they have experienced the presence of a reactor in their vicinity for many years. Therefore, we propose a model of voting with endogenous information acquisition interacting both proximity and learning effects, whose results are compatible with the empirical findings. Citizens receive public and private signals and revise their beliefs on the risk of living close to a plant. Such revision process is nested into a spatial voting model establishing conditions for a similar or different voting behavior of the electorate based on the proximity from the reactor

Inequality assessment in a dynamic framework with heterogenous agents

We propose a method to carry out an inequality assessment in a dynamic and cross sectional framework, by applying the dynamic version of a suitable inequality index, such as the Gini coefficient, as a function of time. We use our methodology to a setup where the optimal value functions is the individuals’ income flows while the initial conditions characterize their level of wealth. When the Hamilton–Jacobi– Bellman system of equations can be solved in closed form, the monotone path of the income distribution is established. Extending the model according to a government intervention gives the possibility to study, first policy for reducing income inequality under a specific exogenous target, and second to minimise income inequality across individuals