An Experimental Investigation of the Disparity between WTA and WTP for Lotteries

In this paper we experimentally investigate the disparity between willingness-to-accept (WTA) and willingness-to-pay (WTP) for risky lotteries. The direction of the income effect is reversed by endowing subjects with the highest price of a lottery when asking the WTP question. Our results show that the income effect is too small to be the only source of the disparity. Since the disparity concentrates on a subsample of subjects, parametric and nonparametric tests of the WTA-WTP ratio may lead to contradictory results. The disparity is significantly reduced when background risk is introduced. That is, putting subjects always into a risky position could improve the contingent valuation method which is often concerned with the assessment of risky situations such as health risks, automobile safety, etc. --WTA-WTP disparity,lotteries,background risk,contingent valuation

Lorenz, Pareto, Pigou: Who Scores Best? Experimental Evidence on Dominance Relations of Income Distributions

Using an experiment with material incentives, this paper investigates the violation of composite dominance relationships, viz. absolute Pareto dominance, Pareto rank dominance, transfer dominance, Lorenz dominance, and generalized Lorenz dominance. Moreover, we test tail independence. The experiment consists of two treatments, a self-concern mode (in which each subject expects payoffs according to her own choices), and a social-planner mode (in which subjects form their preferences without any chance of receiving payoffs when they became effective). The main focus of this paper centers on the behavioral shifts between the self-concern and the social-planner modes. We show, first, that subjects' behavior is different under the two treatments. Second, we show that there are less violations of the two Pareto dominance relations and of generalized Lorenz dominance and more violations of Lorenz dominance and of transfer dominance under the self-concern mode than under the social-planner mode. Within these groups, behavior is more similar under the self-concern mode than under the social-planner mode. Tail independence is widely rejected. --Income distributions,dominance relations,tail independence

An experimental investigation of the disparity between WTA and WTP for lotteries

In this paper we experimentally investigate the disparity between willingness-to-accept (WTA) and willingness-to-pay (WTP) for risky lotteries. The direction of the income effect is reversed by endowing subjects with the highest price of a lottery when asking the WTP question. Our results show that the income effect is too small to be the only source of the disparity. Since the disparity concentrates on a subsample of subjects, parametric and nonparametric tests of the WTA-WTP ratio may lead to contradictory results. The disparity is significantly reduced when background risk is introduced. That is, putting subjects always into a risky position could improve the contingent valuation method, which is often concerned with the assessment of risky situations such as health risks, automobile safety, etc

An Experimental Investigation of the Disparity between WTA and WTP for Lotteries

In this paper we experimentally investigate the disparity between willingness-to-accept (WTA) and willingness-to-pay (WTP) for risky lotteries. The direction of the income effect is reversed by endowing subjects with the highest price of a lottery when asking the WTP question. Our results show that the income effect is too small to be the only source of the disparity. Since the disparity concentrates on a subsample of subjects, parametric and nonparametric tests of the WTA-WTP ratio may lead to contradictory results. The disparity is significantly reduced when background risk is introduced. That is, putting subjects always into a risky position could improve the contingent valuation method which is often concerned with the assessment of risky situations such as health risks, automobile safety, etc

Friedman, Harsanyi, Rawls, Boulding - or Somebody Else?

This paper investigates distributive justice using a fourfold experimental design : The ignorance and the risk scenarios are combined with the self-concern and the umpire modes. We study behavioral switches between self-concern and umpire mode and investigate the goodness of ten standards of behavior. In the ignorance scenario, subjects became on average less inequality averse as umpires. A within-subjects analysis shows that about one half became less inequality averse, one quarter became more inequality averse and one quarter left its behavior unchanged as umpires. In the risk scenario, subjects become on average more inequality averse in their umpire roles. A within-subjects analysis shows that half of them became more inequality averse, one quarter became less inequality averse, and one quarter left its behavior unchanged as umpires. As to the standards of behavior, several prominent ones (leximin, leximax, Gini, Cobb-Douglas) experienced but poor support, while expected utility, Boulding's hypothesis, the entropy social welfare function, and randomization preference enjoyed impressive acceptance. For the risk scenario, the tax standard of behavior joins the favorite standards of behavior. --Distributive justice,income distributions,veil of ignorance

Transformations to achieve the Sustainable Development Goals Includes the SDG Index and Dashboards. Sustainable Development Report 2019

The Sustainable Development Report 2019 presents an updated SDG Index and Dashboards with a refined assessment of countries’ distance to SDG targets. The report has been successfully audited for the first time by the European Commission Joint Research Centre. New indicators have been included, primarily to refine the indicator selection on agriculture, diets, gender equality and freedom of speech. We have also added more metrics for international spillovers, including on fatal work accidents. A new website and data visualization tools are available (http://sustainabledevelopment.report). Once again, Nordic countries – Denmark, Sweden and Finland – top the SDG Index. Yet, even these countries face major challenges in implementing one or several SDGs. No country is on track for achieving all 17 goals with major performance gaps even in the top countries on SDG 12 (Responsible Consumption and Production), SDG 13 (Climate Action), SDG 14 (Life Below Water) and SDG 15 (Life on Land). Income and wealth inequalities, as well as gaps in health and education outcomes by population groups also remain important policy challenges in developing and developed countries alike. The Sustainable Development Report 2019 generates seven major findings: 1. High-level political commitment to the SDGs is falling short of historic promises In September 2019, heads-of-states and governments will convene for the first time in person at the UN in New York to review progress on their promises made four years after the adoption of the 2030 Agenda. Yet, our in-depth analyses show that many have not taken the critical steps to implement the SDGs. Out of 43 countries surveyed on SDG implementation efforts, including all G20 countries and countries with a population greater than 100 million, 33 countries have endorsed the SDGs in official statements since January 1st, 2018. Yet in only 18 of them do central budget documents mention the SDGs. This gap between rhetoric and action must be closed. 2. The SDGs can be operationalized through six SDG Transformations SDG implementation can be organized along the following Transformations: 1. Education, Gender, and Inequality; 2. Health, Wellbeing, and Demography; 3. Energy Decarbonization and Sustainable Industry; 4. Sustainable Food, Land, Water, Oceans; 5. Sustainable Cities and Communities; and 6. Digital Revolution for Sustainable Development. The transformations respect strong interdependencies across the SDGs and can be operationalized by well-defined parts of governments in collaboration with civil society, business, and other stakeholders. They must be underpinned and guided by the principles of Leave No One Behind and Circularity and Decoupling of resource use from human wellbeing. 3. Trends on climate (SDG 13) and biodiversity (SDG 14 and SDG 15) are alarming On average, countries obtain their worst scores on SDG 13 (Climate Action), SDG 14 (Life Below Water) and SDG 15 (Life on Land). No country obtains a “green rating” (synonym of SDG achieved) on SDG 14 (Life Below Water). Trends on greenhouse gas emissions and, even more so, on threatened species are moving in the wrong direction. These findings are in line with the recent reports from the IPCC and IPBES on climate change mitigation and biodiversity protection, respectively. 4. Sustainable land-use and healthy diets require integrated agriculture, climate and health policy interventions Land use and food production are not meeting people’s needs. Agriculture destroys forests and biodiversity, squanders water and releases one-quarter of global greenhouse-gas emissions. In total, 78% of world nations for which data are available obtain a “red rating” (synonym of major SDG challenge) on sustainable nitrogen management; the highest number of “red” rating across all indicators included in the report. At the same time, one-third of food is wasted, 800 million people remain undernourished, 2 billion are deficient in micronutrients, and obesity is on the rise. New indicators on nations’ trophic level and yield gap closure highlight the depth of the challenge. Transformations towards sustainable landuse and food systems are required to balance efficient and resilient agriculture and forestry with biodiversity conservation and restoration as well as healthy diets

Lorenz, Pareto, Pigou: Who Scores Best? Experimental Evidence on Dominance Relations of Income Distributions

Using an experiment with material incentives, this paper investigates the violation of composite dominance relationships, viz. absolute Pareto dominance, Pareto rank dominance, transfer dominance, Lorenz dominance, and generalized Lorenz dominance. Moreover, we test tail independence. The experiment consists of two treatments, a self-concern mode (in which each subject expects payoffs according to her own choices), and a social-planner mode (in which subjects form their preferences without any chance of receiving payoffs when they became effective). The main focus of this paper centers on the behavioral shifts between the self-concern and the social-planner modes. We show, first, that subjects' behavior is different under the two treatments. Second, we show that there are less violations of the two Pareto dominance relations and of generalized Lorenz dominance and more violations of Lorenz dominance and of transfer dominance under the self-concern mode than under the social-planner mode. Within these groups, behavior is more similar under the self-concern mode than under the social-planner mode. Tail independence is widely rejected

On metrics and financing for the Sustainable Development Goals

The world has experienced unprecedented growth in average per capita incomes over the last 50 years, but many countries continue to face deep economic, social, and/or environmental challenges. These include persistent extreme poverty, poor outcomes in human health and education, widespread malnutrition, high inequality measured by income or other characteristics, poor access to infrastructure, growing water stress, the degradation of terrestrial and marine ecosystems, pollution, and climate change. Under business-as-usual trajectories the environmental challenges in particular are expected to worsen significantly. Enhanced international policy coordination and cooperation around shared goals is required to reverse these trends, and many developing countries require more external financial assistance. In response governments have adopted international development goals, including the Millennium Development Goals (MDGs) and their successors, the Sustainable Development Goals (SDGs), which are to be achieved by 2030. These goals complement earlier tools for international policy coordination, notably the environmental conventions, such as the United Nations Framework Convention on Climate Change and the Convention on Biological Diversity. This thesis contributes to the need to understand how progress towards the SDGs can be monitored, how investment needs for climate-resilient development and the SDGs can be estimated, and what lessons can be drawn for international financing mechanisms in support of the SDGs from the experience of the health sector under the MDGs. These issues represent important contemporary questions in the scientific and policy literature, as evidenced by the rapidly growing scientific literature on the SDGs to which this thesis contributes. Chapter 2 introduces a novel SDG Index and Dashboards that combines official and science-based metrics to establish an SDG baseline for the 149 countries for which sufficient data are currently available. The SDG Index and Dashboards measure countries’ distance from achieving the goals, assess overall performance, and identify implementation priorities for each country. We find that many countries’ development models are imbalanced in favor of economic development and at the expense of social inclusion and environmental sustainability. We demonstrate the SDG Index’ usefulness as an explanatory variable in studying policy objectives, such as subjective well-being and in identifying policy priorities. Moreover, the chapter identifies major data gaps for monitoring the SDGs and suggests ways in which these can be closed in coming years. In Chapter 3 we consider the combined investment needs of development objectives in low-income country settings, as exemplified by the MDGs, and measures to adapt to a changing climate. Drawing on consensus investment needs for the MDGs in Africa, as established by the MDG Africa Steering Group, and the literature on investment needs for climate change adaptation, we propose and apply a methodology for integrating these assessments. The chapter reviews major line items in financing the MDGs and considers the nature and extent of additional measures to adapt to climate change, as well as associated financing needs. We find that climate change adaptation may increase total investment needs by some 40 percent. The analysis shows that development and adaptation measures need to be integrated along sectoral lines in order to facilitate implementation by governments. Chapter 4 extends this analysis to propose an analytical framework for SDG needs assessments that translates the 17 SDGs into eight investment areas and introduces a preliminary score to assess the quality and suitability of needs assessment studies. Using this framework, published sector needs assessments are analyzed, harmonized, and consolidated to arrive at a first assessment of private and public investment needs for the SDGs in low- and lower-middle-income countries. Incremental spending needs in these countries are estimated at $1.3-1.4 trillion per year. Approximately half of these incremental investments can be privately financed. Domestic resource mobilization can increase significantly, leaving an external financing gap of perhaps$152-163 billion per year (equivalent to 0.22-0.26% of high-income countries’ GDP) that must be met through international public finance, including Official Development Assistance. Globally, an incremental 1.5-2.5% of world GDP needs to be invested each year by the public and private sectors to achieve the SDGs in every country. Turning to the financing of the SDGs, Chapter 5 investigates the experience of the Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria in financing the rapid scaling up of proven health interventions observed since 2002. The chapter identifies 8 key design principles of the Global Fund that set the institution apart from other multilateral financing mechanisms. It then considers to what extent these design principles have enabled rapid progress in combating the three infectious diseases in a broad range of operating environments, including fragile countries and countries with poor governance. The chapter concludes that the Global Fund has performed better than expected at inception, and that the key design principles explain this success. Adopting these principles may help multilateral grant financing mechanisms focusing on other SDG priorities – such as education; access to energy, water, and sanitation; nutrition; and smallholder agriculture – improve the effectiveness of resource use and accelerate progress towards the goals. In the Chapter 6, we investigate the Global Fund’s Technical Review Panel (TRP) to determine whether it had succeeded in reconciling the competing needs of country ownership of development programs and the need to ensure effective use of scarce resources. We also investigate whether the demand-based application process generated funding allocations that were in line with the Global Fund’s objective to direct funds towards the countries most in need. To answer these questions, we construct a novel dataset and conduct four sets of regression analysis using ordinary least squares and ordered logistic regression models. The chapter finds that the TRP operated in line with the Global Funds’ objectives and allocated funding to countries most in need, though we find evidence that countries with large populations suppressed the volume of financing requested from the Global Fund. The evidence suggests that the TRP promoted learning on how to scale up disease control programs and that the Global Fund operated equally well across different country environments, including fragile and poorly governed countries. The chapter closes by considering the policy implications for financing the SDGs in health and other areas. The concluding chapter summarizes the research findings and critically discusses the methodologies and data used in this thesis. It outlines suggestions for further research and summarizes policy implications for monitoring, implementing, and financing the SDGs.</p

Friedman, Harsanyi, Rawls, Boulding - or Somebody Else?

This paper investigates distributive justice using a fourfold experimental design : The ignorance and the risk scenarios are combined with the self-concern and the umpire modes. We study behavioral switches between self-concern and umpire mode and investigate the goodness of ten standards of behavior. In the ignorance scenario, subjects became on average less inequality averse as umpires. A within-subjects analysis shows that about one half became less inequality averse, one quarter became more inequality averse and one quarter left its behavior unchanged as umpires. In the risk scenario, subjects become on average more inequality averse in their umpire roles. A within-subjects analysis shows that half of them became more inequality averse, one quarter became less inequality averse, and one quarter left its behavior unchanged as umpires. As to the standards of behavior, several prominent ones (leximin, leximax, Gini, Cobb-Douglas) experienced but poor support, while expected utility, Boulding's hypothesis, the entropy social welfare function, and randomization preference enjoyed impressive acceptance. For the risk scenario, the tax standard of behavior joins the favorite standards of behavior

Response to Amir Attaran

Amir Attaran's Policy Forum raises important points on the poor quality of data for some indicators used to measure progress on the Millennium Development Goals (MDGs), but, sadly, uses these findings to draw the wrong conclusions. The evidence he presents on a small number of indicators is partial, and does not justify his conclusion that the MDGs might become a liability and are doomed to fail. Quite the opposite is the case