Sergio Firpo, Antonio F. Galvao, Martyna Kobus, Thomas Parker, Pedro Rosa-Dias
arXiv 17 Apr 2020 · Econometrics · publishedJournal of Econometrics (2020)
arXiv:2004.08468 · PDF · DOI · OpenAlex · Extracted main text
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 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.
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The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Linton, Song, and Whang (2010) An Improved Bootstrap Test of Stochastic Dominance | 1.000 | 7 | 3 | 100% |
| 2 | Fang and Santos (2019) Inference on Directionally Differentiable Functions | 0.909 | 8 | 3 | 75% |
| 3 | Bitler, Gelbach, and Hoynes (2006) What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments | 0.874 | 9 | 2 | 100% |
| 4 | Kahneman and Tversky (1979) Prospect Theory: An Analysis of Decision Under Risk | 0.811 | 4 | 2 | 100% |
| 5 | Linton, Maasoumi, and Whang (2005) Consistent Testing for Stochastic Dominance Under General Sampling Schemes | 0.811 | 4 | 2 | 100% |
| 6 | van der Vaart and Wellner (1996) Weak Convergence and Empirical Processes | 0.644 | 3 | 2 | 67% |
| 7 | Frank, Nelsen, and Schweizer (1987) Best-Possible Bounds for the Distribution of a Sum –- A Problem of Kolmogorov | 0.644 | 2 | 2 | 100% |
| 8 | Makarov (1982) Estimates for the Distribution Function of a Sum of Two Random Variables when the Marginal Distributions are Fixed | 0.644 | 2 | 2 | 100% |
| 9 | Rüschendorf (1982) Random Variables with Maximum Sums | 0.644 | 2 | 2 | 100% |
| 10 | Rockafellar and Wets (1998) Variational Analysis | 0.511 | 2 | 2 | 50% |
Showing the top 10 of 64 scored citations.
arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.
| Citing paper | Intensity | Mentions | Sections | |
|---|---|---|---|---|
| 1 | Ranking Policies Under Loss Aversion and Inequality Aversion | 0.928 | 10 | 5 |
| 2 | Debiased Machine Learning of Aggregated Intersection Bounds and Other Causal Parameters | 0.405 | 1 | 1 |