Weather Index Drought Insurance: An Ex Ante Evaluation for Millet Growers in Niger

In the Sudano-Sahelian region, which includes South Niger, the inter-annual variability of the rainy season is high and irrigation is limited. As a consequence, bad rainy seasons have a massive impact on crop yield and regularly result in food crises. Traditional insurance policies based on crop damage assessment are not available because of asymmetric information and high transaction costs compared to the value of production. We assess the risk mitigation capacity of an alternative form of insurance which has been implemented at a large scale in India since 2003: insurance based on a weather index. We compare the efficiency of various weather indices to increase the expected utility of a representative risk-averse farmer. We show the importance of using plot-level yield data rather than village averages, which bias results due to the presence of idiosyncratic shocks. We also illustrate the need for out-of-sample estimations in order to avoid overfitting. Even with the appropriate index and assuming substantial risk aversion, we find a limited gain of implementing insurance, which roughly corresponds to, or slightly exceeds, the cost observed in India for implementing such insurance policies. However, when we separately treat the plots with and without fertilisers separately, we see that the benefit of insurance is slightly higher in the former case. This suggests that insurance policies may slightly increase the use of risk-increasing inputs such as fertilisers and improved cultivars, and hence improve average yields, which remain very low in the region.     

More pessimism than greediness: a characterization of monotone risk aversion in the rank-dependent expected utility model

Summary. This paper studies monotone risk aversion, the aversion to monotone, mean-preserving increase in risk (Quiggin [21]), in the Rank Dependent Expected Utility (RDEU) model. This model replaces expected utility by another functional, characterized by two functions, a utility function u in conjunction with a probability-perception function f. Monotone mean-preserving increases in risk are closely related to the notion of comparative dispersion introduced by Bickel and Lehmann [3,4] in Non-parametric Statistics. We present a characterization of the pairs (u,f) of monotone risk averse decision makers, based on an index of greediness G _u of the utility function u and an index of pessimism P _f of the probability perception function f: the decision maker is monotone risk averse if and only if . The index of greediness (non-concavity) of u is the supremum of taken over . The index of pessimism of f is the infimum of taken over 0 < v < 1. Thus, , with G _u = 1 iff u is concave. If then , i.e., f is majorized by the identity function. Since P _f = 1 for Expected Utility maximizers, forces u to be concave in this case; thus, the characterization of risk aversion as is a direct generalization from EU to RDEU. A novel element is that concavity of u is not necessary. In fact, u must be concave only if P _f = 1.Received: 10 April 2001, Revised: 18 November 2003, JEL Classification Numbers: D81. Correspondence to: Michéle CohenAlain Chateauneuf, Michéle Cohen, Isaac Meilijson: We are most grateful to Mark Machina, Peter Wakker and two anonymous referees for very helpful suggestions and comments.     

Methods for Environmental and Economic Accounting for the Exploitation of Wild Fish Stocks and their Applications to the Case of Icelandic Fisheries

The paper discusses methods for estimating the value of commercially exploited fish stocks and the cost of exploiting them. Methods which are recommended in the System of National Accounting (SNA) satellite system and the System for Integrated Environmental and Economic Accounting (SEEA) and relevant for this task are discussed. The paper questions the relevance of some of these methods. It argues for the integration of economic accounting for wild fish stocks with estimation of efficient management of them. Using biological and economic data makes it possible to produce consistent estimates of the value of fish stocks and the cost of exploiting them. These estimates are useful for national accounting and for guiding management of fisheries. This method allows estimation of the cost of inefficiency of fisheries management besides estimation of the cost of depletion. The different methods are illustrated using data on commercial fisheries in Iceland and the fish stocks that they exploit. It is shown that even if all methods are based on market valuation and use only objective data they lead to very different outcomes.     

Growth,Convergence, and Social Cohesion in the European Union

The aim of this paper is to analyze the economic and social cohesion in the European Union. There are different factors to explain the convergence process and besides, empirical findings are not conclusive. To the European Union, GDP per head interregional differences have decreased for certain periods but it has remained unchanged or even increased for others periods. The second report on the economic and social cohesion indicates that some decades are necessary to eliminate regional differences. These differences in regional GDP are mainly explained by differences in their productive structures, degree of innovate activity, communications structures, which depend on the relative level of transport infrastructures, and manpower qualifications. This analysis allows us to obtain some conclusions to the economic policies and the social cohesion. A preliminary version of this paper was presented in the 57th International Atlantic Conference, held in Lisbon, Portugal, March 10–14, 2004.     

Rate of Return Regulation: The Case of Spanish Ports

An original model is put forward in this article to explain and consider the behavior of some of the most important public services in Spain. The cost function approach and the input distance function approach are used to estimate the existence of overcapitalization as a result of rate of return regulation. The results show that overcapitalization generated by this regulation is too significant not to be taken into account.     

Type space on a purely measurable parameter space

Summary. Several game theoretical topics require the analysis of hierarchical beliefs, particularly in incomplete information situations. For the problem of incomplete information, Harsányi suggested the concept of the type space. Later Mertens and Zamir gave a construction of such a type space under topological assumptions imposed on the parameter space. The topological assumptions were weakened by Heifetz, and by Brandenburger & Dekel. In this paper we show that at very natural assumptions upon the structure of the beliefs, the universal type space does exist. We construct a universal type space, which employs purely a measurable parameter space structure.Received: 12 August 2002, Revised: 1 March 2004, JEL Classification Numbers: C70, C79, D80, D82.Miklós Pintér: The author wishes to thank Péter Tallos, Tamás Solymosi, and an anonymous referee for their suggestions and comments. This work was supported by OTKA grant T046194.     

Minimum distance estimation of the spatial panel autoregressive model

This paper contributes to the interface literature of new methodological foundation of analyzing historical data with space and spatio-temporal phenomena. In particular, I consider estimating the spatial panel autoregressive model using the minimum distance estimator. Spatial autoregression has important implications for economic system that typifies correlatedness across many spatial locations and which could evolve over long span of time. To overcome computational difficulties, I suggest a two-stage estimation procedure based on minimum distance estimators. A striking feature of the proposed model is that minimum distance estimates are derived under common slopes and complete equality of parameters across spatial units. Assumption of common slopes across spatial units is an empirical and theoretical plausibility as many spatial units are observed to share common trend and typology of changes occurring to the individual system under which equality of parameters are possibilities. The estimation strategy allows various restrictions on time-varying vector parameters. Moreover, those restrictions can easily be tested. I apply this procedure to the residential demand for water of 115 French municipalities over the biannual period 1988–1993. The primary contribution of the paper is to the methodological side of cliometrics while the empirical application (with shorter time period) has been presented for illustrative purpose although, it can nonetheless be readily applied to historical data with long-time horizon allowing for restrictions such as spatio-temporal common vector and structural break in parameter estimates.

Sample attrition and labor force dynamics: Evidence from the Spanish labor force survey

In this paper we examine a number of issues that arise in investigating labor force dynamics using the Spanish Labor Force Survey (EPA). These issues are by no means specific to the Spanish case and apply to most European-style labor force surveys. Our main conclusions may be summarized as follows. First, survey nonresponse cannot be neglected. Second, the EPA tends to underestimate employment and participation of high-educated young people, and to overestimate those of the low-educated elderly. Finally, we find little evidence that attrition causes important selection biases in estimating quarterly transition probabilities.     

Immigrants’ net direct fiscal contribution: How does it change over their lifetime?

Life-cycle direct public fiscal contributions and transfers are studied using longitudinal income tax data from 1982 to 2016 and administrative files for immigrants landed in Canada from 1980 to 2016. Relative to a comparison group comprising the Canadian-born and immigrants landed before 1980, immigrants since 1980 have a lower average net direct fiscal contribution (NDFC) during their working years due to their lower taxes and social security contributions but a higher average NDFC after 65 years of age because of reduced public pension eligibility and entitlement. Immigrants who landed at younger than 19 years old have much higher direct fiscal contributions than other age-at-arrival groups and reach their peak of contributions around 10 years earlier in life than other age-at-arrival groups. Immigrants whose age at arrival is above 65 have a less negative average NDFC than other age-at-arrival groups over the above-65 life cycle. These life-cycle age𠄁at-arrival trajectories are stable for immigrants in different landing cohorts. We apply the life-cycle estimates to project the present discounted value of lifetime NDFCs for immigrants who landed in 2016. For each landing age group, refugees and family class immigrants have negative or zero average present values of life-cycle NDFCs, much below that of economic immigrants.     

Editors’ note

Portuguese Economic Journal -