- Purification and disambiguation of Ellsberg equilibria
(with Frank Riedel)Economic Theory Forthcoming
- Why not consider that being absolutely poor is worse than being only relatively poor? Journal of Public Economics (2017) 152, 79-92
- Fair Social Orderings with Other-regarding Preferences (with Martin Van der Linden) Social Choice and Welfare (2016) 46-655
This paper was awarded the LAVG prize (best paper from young researcher) at the 2017 ASSET conference.
I study income poverty indices in a framework considering two poverty lines: one absolute line capturing subsistence and one relative line capturing social exclusion. I show that poverty indices accounting for these two lines should be hierarchical additive. Hierarchical indices grant a form of priority to subsistence: they always implicitly consider that an absolutely poor individual is more poor than an individual who is only relatively poor, regardless of the income standard in their respective societies. Importantly, classical additive indices are not hierarchical. As a result, they yield debatable poverty comparisons of societies having different income standards. I derive a new (hierarchical) index that generalizes the ubiquitous head-count ratio. This extended head-count ratio is equal to the fraction of absolutely poor individuals plus the fraction of individuals who are only relatively poor multiplied by an endogenous weight.
“Too young to die”. Deprivation Measures combining poverty and premature mortality (with Jean-Marie Baland and Guilhem Cassan) + Online Appendix.
Most measures of deprivation concentrate on deprivation among the living population and, thus, ignore premature mortality. This omission leads to a severe bias in the evaluation of deprivation. We propose three different measures that combine information on poverty and premature mortality of a population in a meaningful manner. These indices are consistent and satisfy a number of desirable properties unmet by all other measures combining early mortality and poverty. Moreover, these measures are readily computable with available data and easily interpretable. We show that omitting premature mortality leads to an underestimation of total deprivation in 2014 of at least 25% at the world level. We also show that the ranking in terms of deprivation of countries is substantially changed with our measures, and that our understanding of the evolution of countries’ deprivation may be reversed when taking premature mortality into account.
Manipulability and tie-breaking in constrained school choice
(with Martin Van der Linden) – R&R at Journal of Economic Theory
In constrained school choice mechanisms, students can only rank a subset of the schools they could potentially access. We characterize dominant and undominated strategies in the constrained Boston (BOS) and deferred acceptance (DA) mechanisms. Using our characterization of dominant strategies we show that in constrained DA, the single tie-breaking rule outperforms the multiple tie-breaking rule in terms of both manipulability and stability. We also show that DA is less manipulable than constrained BOS in the sense of Arribillaga and Massó (2015). Using our characterizations of undominated strategies, we derive advice for the students and show that more strategies can be excluded on the basis of dominance in constrained DA than in constrained BOS.
The first Millennium Development Goal was to halve extreme absolute poverty over the period 1990-2015. This goal has been met by a large margin, but the simultaneous increase in within-country inequality has led to an increase in relative poverty. As absolute and relative poverty evolved in opposite directions, whether or not overall poverty – which combines both absolute and relative poverty – has been reduced depends on the arbitrary priority assigned to absolutely poor individuals. We show that, if we assume that an individual who is absolutely poor is more poor than an individual who is only relatively poor, overall poverty in the developing world has been halved over the period, regardless of the value chosen for the priority parameter. This result is robust to alternative specifications of the poverty lines and to the exclusion of China or India.
The Boston mechanism (BOS) is widely used for the assignment of students to schools. Yet, BOS is highly manipulable and, therefore, may lead to Pareto inferior assignments. We propose a new indirect matching mechanism (UPBOS) that is a slight variant of BOS. UPBOS is less manipulable than BOS in important ways. Primarily, students always have a best reply featuring truthful reported preference. This property implies that UPBOS is not manipulable in the sense of Pathak and Sonmez (2013). The lower manipulability of UPBOS helps reaching more efficient assignments than those reached by BOS. We show that each equi- librium of BOS is associated to a set of equilibria of UPBOS, all of which are Pareto superior. UPBOS generalizes to a class of mechanisms whose members are even less manipulable than UPBOS.
In search of advice for participants in constrained school choice
(with Martin Van der Linden)
School choice mechanisms are typically constrained, with students allowed to report preferences on a limited number of schools only. Under constraints, even the deferred acceptance mechanism (DA) is manipulable and it is unclear how students should play. We provide advice by characterizing undominated strategies for the constrained versions of both DA and the Boston mechanism (BOS). We show that domination alone excludes more strategies in constrained DA than in constrained BOS. We also characterize “safe” and “maximin” strategies that risk- averse students might favor. These strategies achieve higher welfare and are more often available in constrained DA than in constrained BOS.
A new measure of income poverty for Europe
(with Tim Goedemé and Karel Van den Bosch)
In Europe poverty is usually measured with the at-risk-of-poverty indicator which defines the poverty threshold as 60 per cent of national median income. With this indicator, poverty seems to be lower in some ‘poor’ EU countries than in some of the richest EU Member States. Also, when the median income changes quickly, the evolution of poverty as shown by the indicator can be counterintuitive, for instance resulting in stagnation or even a decrease in poverty when median incomes fall and living conditions of the poor deteriorate. In this article we propose a new poverty indicator, the Poverty Gap Ratio with priority to the pan-European poor (PGR-PAN) which is not subject to these limitations. On the basis of EU-SILC data we show that our indicator results in results that are in better agreement with intuitive notions about poverty within the EU and captures more adequately changes as well as cross-national differences in living standards.
A criterion to compare mechanisms when solutions are not unique, with applications to constrained school choice
(with Martin Van der Linden)
We introduce a new criterion to compare the properties of mechanisms when the solution concept used induces multiple solutions. Our criterion generalizes previous approaches in the literature. We use our criterion to compare the stability of constrained versions of the Boston (BOS) and deferred acceptance (DA) school choice mechanisms in which students can only rank a subset of the schools they could potentially access. When students play a Nash equilibrium, we show that there is a stability cost to increasing the number of schools students can rank in DA. On the other hand, when students only play undominated strategies, increasing the number of schools students can rank increases stability. We find similar results for BOS. We also compare BOS and DA. Whatever the number of schools students can rank, we find that BOS is more stable than DA in Nash equilibrium, but less stable in undominated strategies.
WORK IN PROGRESS:
Fair inheritance taxation (with François Maniquet)