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Stochastic Dominance and Demographic Policy Evaluation: A Critique

Juan Cordoba and Xiying Liu

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Stochastic dominance (SD) is commonly used to rank income distribution and assesssocial policies. The literature argues that SD is a robust criterion for policy evaluationbecause it requires minimal knowledge of the social welfare function. We argue that,on the contrary, SD is not a robust criterion. We do this by carefully introducing mi-crofoundations into a model by Chu and Koo (1990) who use SD to provide support tofamily-planning programs aiming at reducing the fertility of the poor. We show thatfertility restrictions are generally detrimental for both individual and social welfare inspite of the fact that SD holds. Our Â…findings are an application of the LucasÂ’Critique.

Keywords: Fertility; Welfare; income distribution; children; demographic policies; one child policy; stochastic dominance. (search for similar items in EconPapers)
JEL-codes: I I1 I3 J J1 O O5 (search for similar items in EconPapers)
Date: 2013-04-14
New Economics Papers: this item is included in nep-dem
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Journal Article: Stochastic Dominance and Demographic Policy Evaluation: A Critique (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:36117

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