Imperial College London
Alternate

Pedro Rosa Dias

Business School

Associate Professor of Health Economics
 
 
 
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Contact

 

p.rosa-dias

 
 
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Location

 

389Business School BuildingSouth Kensington Campus

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Summary

 

Publications

Citation

BibTex format

@article{Rosa:2023:10.1016/j.jeconom.2023.105643,
author = {Rosa, Dias JP and Firpo, S and Martyna, K and Galvão, A},
doi = {10.1016/j.jeconom.2023.105643},
journal = {Journal of Econometrics},
title = {Loss aversion and the welfare ranking of policy interventions},
url = {http://dx.doi.org/10.1016/j.jeconom.2023.105643},
year = {2023}
}
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RIS format (EndNote, RefMan)

TY  - JOUR
AB  - This paper develops theoretical criteria and econometric methods to rank policy interventions in terms of welfare when individuals are loss-averse. Our new criterion for “loss aversion-sensitive dominance” defines a weak partial ordering of the distributions of policy-induced gains and losses. It applies to the class of welfare functions which model individual preferences with non-decreasing and loss-averse attitudes towards changes in outcomes. We also develop new semiparametric statistical methods to test loss aversion-sensitive dominance in practice, using nonparametric plug-in estimates; these allow inference to be conducted through a special resampling procedure. Since point-identification of the distribution of policy-induced gains and losses may require strong assumptions, we extend our comparison criteria, test statistics, and resampling procedures to the partially-identified case. We illustrate our methods with a simple empirical application to the welfare comparison of alternative income support programs in the US.
AU  - Rosa,Dias JP
AU  - Firpo,S
AU  - Martyna,K
AU  - Galvão,A
DO  - 10.1016/j.jeconom.2023.105643
PY  - 2023///
SN  - 0304-4076
TI  - Loss aversion and the welfare ranking of policy interventions
T2  - Journal of Econometrics
UR  - http://dx.doi.org/10.1016/j.jeconom.2023.105643
UR  - https://www.sciencedirect.com/science/article/pii/S0304407623003597
UR  - http://hdl.handle.net/10044/1/108360
ER  -
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