The tragedy (or virtue?) of in-kind redistribution: How the poor pays for the rich's status concerns

The model describes a two person economy, in which one individual with positive exogenous income is altruist towards an individual with no income. The rich individual cares for her own social status. She evaluates her status by comparing disposable net cash incomes. When deciding on the size and on the structure of redistribution, the rich person decides that at least part of the redistribution is done in–kind, even if a private substitute for the publicly provided good is available. The amount of in–kind transfers that is provided exceeds the unconstrained Marshallian demand of the poor individual for the good in question. Hence, optimal policy restricts the poor in his allocative choices. The overall resource transfer is lower when the richer cares for her status compared to a situation in which she does not.Redistribution, in–kind transfers, altruism, status

Discounting the Long-Distant Future: A Simple Explanation for the Weitzman-Gollier-Puzzle

In this paper, we reconsider the debate on Weitzman's (1998) suggestion to discount the long-run future at the lowest possible rate, referring to Gollier (2004) and Hepburn & Groom (2007). We show that, while Weitzman's use of the present value approach may indeed seem questionable, its outcome, i.e. a discount rate that is declining over time, is nevertheless reasonable, since it can be justified by assuming a plausible degree of risk aversion.discount rates, uncertainty, risk aversion

Discounting and Welfare Analysis Over Time: Choosing the ç

Based on the Ramsey equation and an ethically motivated rejection of pure utility time discount, the Stern Review on the Economics of Climate Change concentrates on the use of the elasticity of marginal utility ç in the intergenerational social welfare function. We support this position by showing that, also from the view point of sustainability, application of ç is preferable to the use of the pure time discount parameter ñ when a balanced distribution of utility across generations is to be brought about. After reviewing empirical studies on the size of ç we develop a novel axiomatic approach based on non–envy criteria by which we obtain values for ç lying in a range between 1 and 2. Whereas the starting point of the Stern Review quite explicitly is an ethical one, many critics of the Review deny this ethical stance and thus – as described in our paper – miss a crucial element of the Stern Review.Ramsey equation, discounting, sustainability, non-envy

The tragedy (or virtue?) of in-kind redistribution: How the poor pays for the rich's status concerns

The model describes a two person economy, in which one individual with positive exogenous income is altruist towards an individual with no income. The rich individual cares for her own social status. She evaluates her status by comparing disposable net cash incomes. When deciding on the size and on the structure of redistribution, the rich person decides that at least part of the redistribution is done inkind, even if a private substitute for the publicly provided good is available. The amount of inkind transfers that is provided exceeds the unconstrained Marshallian demand of the poor individual for the good in question. Hence, optimal policy restricts the poor in his allocative choices. The overall resource transfer is lower when the richer cares for her status compared to a situation in which she does not

Empirical Transition Matrix of Multi-State Models: The etm Package

Multi-State models provide a relevant framework for modelling complex event histories. Quantities of interest are the transition probabilities that can be estimated by the empirical transition matrix, that is also referred to as the Aalen-Johansen estimator. In this paper, we present the R package etm that computes and displays the transition probabilities. etm also features a Greenwood-type estimator of the covariance matrix. The use of the package is illustrated through a prominent example in bone marrow transplant for leukaemia patients.

Welfare state retrenchment: The partisan effect revisited

This paper aims to shed light on the role of the "ideology" of political parties in shaping the evolution of the welfare state in 18 developed democracies, by providing empirical findings on the determinants of social programs entitlements and social spending over the period 1981-1999. The paper shows that structural change is a major determinant of the extent of social protection. Our results suggest that overall spending is driven up by structural change. On the other hand, strong structural change has a negative influence on welfare entitlements measured by net replacement rates of sickness insurance or unemployment benefits. Partisan influence plays an important role in the dynamics of the welfare state. Left-wing governments strengthen the positive effect of shocks on aggregate social expenditure while right-wing governments undertake even stronger cutbacks in replacement rates as a reaction to structural change.welfare state ; ideology ; structural change

Discounting and welfare analysis over time: choosing the [eta]

Based on the Ramsey equation and an ethically motivated rejection of pure utility time discount, the Stern Review on the Economics of Climate Change concentrates on the use of the elasticity of marginal utility ç in the intergenerational social welfare function. We support this position by showing that, also from the view point of sustainability, application of ç is preferable to the use of the pure time discount parameter ñ when a balanced distribution of utility across generations is to be brought about. After reviewing empirical studies on the size of ç we develop a novel axiomatic approach based on non envy criteria by which we obtain values for ç lying in a range between 1 and 2. Whereas the starting point of the Stern Review quite explicitly is an ethical one, many critics of the Review deny this ethical stance and thus - as described in our paper - miss a crucial element of the Stern Revie