The application of the Pareto distribution to approximate income distributions of wealthy households in Poland

The aim of the paper is to approximate the equivalent income distributions of wealthy households in particular socio-economic groups using the Pareto distribution, with parameters estimated by means of the maximum likelihood estimation method. Households whose income exceeded the established wealth threshold were classified as wealthy households. Income distributions of wealthy households are usually non-modal and heavy-tailed, thus, the Pareto distribution was applied as their theoretical model. The equivalent income of wealthy households in Poland was analysed in total and in particular socio-economic groups. The research was based on data from the 2014–2017 Household Budget Survey. Selected similarity measures were used to examine the degree to which the theoretical distributions proved consistent with the empirical ones. The obtained results confirmed the high level of consistency of empirical income distributions with the Pareto model. Moreover, very good approximations were obtained especially for wealthy households of employees and self-employed, as well as pensioners. Slightly worse results were obtained for the farmers group. Theoretical distributions well fitted to empirical data were used to estimate selected distribution characteristics, including measures of location, dispersion and inequality, and to compare the different groups in terms of their wealth.

Association between maternal employment status during pregnancy and risk of depressive symptomatology 1 month after childbirth: the Japan Environment and Children’s Study

BackgroundPrevious studies, which examined the association between employment status and postpartum depression, were limited by binary or ternary employment status measures (employed/unemployed or full-time/part-time/unemployed). This study examined the association between detailed employment status during pregnancy and risk of depressive symptomatology 1 month after childbirth, and the effect modification by one’s perceived level of social support and household equivalent income.MethodsOur study examined 76 822 participants in the Japan Environment and Children’s Study. The exposure included maternal employment status during pregnancy (regular workers, dispatched workers, part-time workers, self-employed workers, non-employed and others), and the outcome was depressive symptomatology 1 month after childbirth: Edinburgh Postnatal Depression Scale (EPDS scores ≥9 and ≥13). Adjusted ORs and 95% CIs of depressive symptomatology associated with employment status were calculated by multivariable logistic regression. Subgroup analyses by perceived level of social support and household equivalent income were conducted.ResultsCompared with regular workers, the risk of depressive symptomatology (EPDS score ≥9) was higher for non-employed and others, and that (EPDS score ≥13) was so for part-time workers. There was no significant interaction by perceived level of social support and household equivalent income in the associations. However, part-time workers and non-employed had excess risk of depressive symptomatology among women with lower perceived level of social support, but not among those with the higher one.ConclusionCompared with regular workers, part-time workers and non-employed had an increased risk of depressive symptomatology, which was confined to women with lower perceived level of social support.

Equivalent Income and the Well-Being Burden of Disease

Economic evaluation of health policy has to go beyond health to focus on a broader concept of individual well-being if it aims at contributing to the debate about the optimal size of the health budget while taking into account economic inequality. The definition of well-being for policy purposes is neither a psychological nor a metaphysical issue, but a normative one. Happiness or subjective satisfaction are not attractive for this purpose, and this chapter proposes an alternative, the so-called equivalent income measure. Equivalent income does respect individual considered opinions about what is a good life. The author shows that the concept can be made operational through an analysis of the well-being burden of disease in various European countries.

Risk investment decisions within the deterministic equivalent income model

Purpose The purpose of this paper is to establish a deterministic equivalent income model (DEIM) based on the risk cost (RC) and risk aversion of investors. The model fully considers both subjective and objective factors that affect risk investment and reasonably evaluates risk investment schemes to choose the correct investment scheme and gain greater investment returns. Design/methodology/approach The utility function is used to measure the extent to which an investor is satisfied by investment returns in various scenarios. Risk aversion expresses subjective attitude of investors to risk. RC represents risk loss in currency. This methodology is based on risk aversion function, utility function and RC theory to establish DEIM. Findings This study shows that investors with different risk preferences have different certainty equivalent returns (CER), so their choices of investment options change accordingly. Practical implications In this paper, the authors use DEIM to test an investment case and conclude that the CER and investment scheme both change with different risk preferences. At the same time, case analysis shows that DEIM is reasonable and stable when evaluating risk investment schemes. Originality/value In this study, the authors innovate by introducing both the RC and risk aversion degree into risk investment schemes evaluation and by deriving a utility function from the absolute risk aversion function to build a utility decision matrix and establish DEIM. The model combines the subjective and objective factors that influence risk investment decisions.

Measuring Well-Being

This chapter discusses the well-being measure: a key component of the social welfare function (SWF) framework. This measure, w(·), assigns well-being numbers to individuals in outcomes so as to reflect admissible well-being comparisons (of well-being levels and/or well-being differences). In order for the SWF framework to function, these admissible comparisons must include interpersonal as well as intrapersonal comparisons; the chapter explains why. It then shows how von Neumann/Morgenstern (vNM) utility functions can be used to construct an interpersonally comparable well-being measure that respects individual preferences. A different preference-based well-being measure, the equivalent-income measure, is also reviewed. Although the preference view of well-being is dominant in the SWF literature, w(·) may instead be based upon a non-preference view of well-being, such as an hedonic or objective-good account. The chapter concludes by considering why some economists have been skeptical about interpersonal comparisons.

THE EFFECT OF FINANCIAL DIFFICULTIES ON COGNITIVE FUNCTION IN A JAPANESE ELDERLY POPULATION SAMPLE

Background: Studies have been investigating the effect of financial difficulties on cognitive function especially in the US and Australia. However, there is still a discrepancy regarding the results. This study aims to estimate the effect of financial difficulties on cognitive function in a Japanese elderly population sample. It is rewarding to focus on the Japanese setting, which has the highest proportion of elderly in the world. Method: This study uses a longitudinal panel dataset which include randomly selected elderly Japanese citizens aged 60 and over; the National Survey of the Japanese Elderly. It is a panel dataset containing income and cognitive function. It is ideal dataset to capture the probability of onset of cognitive impairment as it focuses on the elderly. We estimate the effect of participants’ equivalent income on the probability of onset of cognitive impairment at a following survey point using random-effect probit model. Result: The first main result is there is a significant negative effect from financial difficulties on cognitive function. The results indicate that when participants’ equivalent income drops by 1%, they are 2.2% more likely to develop cognitive impairment. The second result is that this negative effect is heterogeneous, depending on their income level. Specifically, this negative effect is observed only at low income level, but not at high income level. That is, the deteriorating effect by impoverishment would be severe when the financially needy people faced income drops. Discussion: Income support plays an important role in improving recipients’ cognitive function, especially among the poor.

Social transfers in Poland in the context of monetary and multidimensional poverty

The article examines the impact of the social transfers on well-being distribu-tion in Poland in 2010 and 2014. The main purpose is to assess the relationship between the distribution of benefits and of well-being, the impact of benefits on social indicators (i.e. the incidence and intensity of monetary and multidimensional poverty) as well as the influence of benefits on the behaviour of beneficiaries. The individual well-being is measured by means of equivalent income as well as by multidimensional indicator, including also consumption, dwelling quality, household appliances and subjective evaluations of the economic position. The study is based on data for 2010 and 2014 from the household budget survey of Statistics Poland. The comparison of the distribution of transfers and well-being indicates that the benefits are definitely pro-poor, irrespectively to the method of comparison and well-being measure. In 2014, as compared to 2010, higher reduction of poverty due to the transfers took place, in spite of the reduced number of recipients. However, the estimation of the net effect of the benefits including behavioural responses suggests strong demotivation effect.