Robust Normative Comparisons of Socially Risky Situations

Nicolas Gravel () and Benoît Tarroux

No 806, IDEP Working Papers from Institut d'economie publique (IDEP), Marseille, France

Abstract: In this paper, we characterize and empirically implement robust normative criteria for comparing societies on the basis of their allocations of risks among their members. Risks are modelled as lotteries on the set of distributions of state-contingent pecuniary consequences. Individuals are assumed to have individualistic Von Neuman-Morgenstern preferences for these risks. Appealing to Harsanyi’s aggregation theorem, we provide empirically implementable criteria that coincide with the unanimity, over all such individual preferences, of anonymous and Pareto-inclusive Von Neuman Morgenstern social rankings of risks. The empirically implementable criteria can be interpreted as sequential expected poverty dominance. Illustrations of the usefulness of the criteria for comparing the exposure to unemployment risk of different segments of the French and US workforce and for appraising the evolution, over time, of risks of violent crimes in India are also provided.

Keywords: Risk; Dominance; ex-ante Social Welfare; Expected Poverty; Unemployment; Crime. (search for similar items in EconPapers)
JEL-codes: C81 D3 D63 D81 I32 J63 J64 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2008-10-15, Revised 2008-10-15
New Economics Papers: this item is included in nep-upt
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Related works:
Journal Article: Robust normative comparisons of socially risky situations (2015)
Working Paper: Robust normative comparisons of socially risky situations (2015)
Working Paper: Robust normative comparisons of socially risky situations (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:iep:wpidep:0806

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