Reducing Risk as well as Inequality: Assessing the Welfare State's Insurance Effects

Leading accounts of the politics of the welfare state focus on societal demands for risk-spreading policies. Yet current measures of the welfare state focus not on risk, but on inequality. To address this gap, this letter describes the development of two new measures, risk incidence and risk reduction, which correspond to the prevalence of large income losses and the degree to which welfare states reduce that prevalence, respectively. Unlike existing indicators, these measures require panel data, which the authors harmonize for twenty-one democracies. The study finds that large losses affect all income and education levels, making the welfare state valuable to a broad cross-section of citizens. It also finds that taxes and transfers greatly reduce the prevalence of such losses, though to varying degrees across countries and over time. Finally, it disaggregates the measures to identify specific ‘triggers’ of large losses, and finds that these triggers are associated with risks on which welfare states focus, such as unemployment and sickness.

From pool to profile: Social consequences of algorithmic prediction in insurance

The use of algorithmic prediction in insurance is regarded as the beginning of a new era, because it promises to personalise insurance policies and premiums on the basis of individual behaviour and level of risk. The core idea is that the price of the policy would no longer refer to the calculated uncertainty of a pool of policyholders, with the consequence that everyone would have to pay only for her real exposure to risk. For insurance, however, uncertainty is not only a problem – shared uncertainty is a resource. The availability of individual risk information could undermine the principle of risk-pooling and risk-spreading on which insurance is based. The article examines this disruptive change first by exploring the possible consequences of the use of predictive algorithms to set insurance premiums. Will it endanger the principle of mutualisation of risks, producing new forms of discrimination and exclusion from coverage? In a second step, we analyse how the relationship between the insurer and the policyholder changes when the customer knows that the company has voluminous, and continuously updated, data about her real behaviour.

Prolonged diapause has sex-specific fertility and fitness costs

Diapause in seasonal environments allows insects to survive adverse seasons. However, individuals can sometimes enter a prolonged diapause for more than a year, and also skip favourable seasons, which can bring additional costs through e.g. loss of metabolic resources. At the same time, prolonged diapause can be beneficial if it allows individuals to have a risk-spreading strategy to skip potentially suboptimal breeding seasons. We studied if prolonged diapause (2-year diapause) negatively affects the fertility and fitness of female and male Colorado potato beetles (Leptinotarsa decemlineata) compared to control (1-year diapause) beetles. We also tested the parental effects on the subsequent chemical stress tolerance of their offspring. We found that prolonged diapause carried fertility costs only for females who were less fertile than the control females. However, no differences in fertility were observed in males. Furthermore, prolonged diapause in females resulted in offspring with lower larvae-to-adult survival even though these offspring had accelerated development times. In contrast, paternal diapause duration had no effects on their offspring larvae-to adult survival, but prolonged diapause males sired offspring with slower development times than control males. Perhaps to compensate the costs related to prolonged diapause both older parents produced or sired offspring with higher body mass than control parents. Despite the differences in emergence mass, parental diapause duration did not affect offspring insecticide stress tolerance. The difference between females and males most likely results from the observed differences in prolonged diapause females’ capacity to fight against cellular oxidative damage which was poorer compared to the control females. Even though prolonged diapause allows individuals to have a risk-spreading strategy it carries sex-specific fertility and fitness costs indicating that selection could favour this in males but not in females.

Transfer Entropy between Communities in Complex Financial Networks

In this paper, we analyze information flows between communities of financial markets, represented as complex networks. Each community, typically corresponding to a business sector, represents a significant part of the financial market and the detection of interactions between communities is crucial in the analysis of risk spreading in the financial markets. We show that the transfer entropy provides a coherent description of information flows in and between communities, also capturing non-linear interactions. Particularly, we focus on information transfer of rare events—typically large drops which can spread in the network. These events can be analyzed by Rényi transfer entropy, which enables to accentuate particular types of events. We analyze transfer entropies between communities of the five largest financial markets and compare the information flows with the correlation network of each market. From the transfer entropy picture, we can also identify the non-linear interactions, which are typical in the case of extreme events. The strongest flows can be typically observed between specific types of business sectors—financial sectors is the most significant example.

Irregular hatching patterns of Branchinecta orientalis G.O. Sars, 1901 (Branchiopoda: Anostraca) in response to parental food, brood order, and pre-inundation conditions

ABSTRACT Highly variable environmental conditions can put the survival of inhabitants of temporary pools at high risk, as they may not complete their life cycle. Different evolutionary responses can prevent the extinction of the inhabitants of ephemeral wetland habitats. One specific mode of response to environmental changes is bet-hedging as risk-spreading strategy and long-term fluctuating selection. The fairy shrimp Branchinecta orientalis G.O. Sars, 1901 is a broadly distributed species in Europe and Asia. We investigated the hatching pattern of B. orientalis resting eggs as a result of various factors, alone or interacting: 1) brood order, 2) food supplied to the parental generation, and 3) various pre-inundation conditions. Results were recorded for cumulative hatching over 10 d, hatching at the first day, and the first day of hatching. The factors with significant effects on hatching percentage were 1) brood order, 2) type of food, 3) pre-inundation conditions, 4) interaction between brood order and type of food, and 5) interaction between type of food and pre-inundation conditions (P < 0.05). Within the first 24 h, 44% of total hatching occurred. Resting eggs from the first brood showed the highest cumulative hatching. The lowest mean resting egg size was found when parents were fed fish pond effluents supplemented with Haematococcus sp. (Chlorophyta); this group of resting eggs also had the highest cumulative hatching percentage. Eggs that had stayed for one week in the parental medium showed significantly higher cumulative hatching percentage, than eggs that had stayed in the medium for two weeks, or that had not stayed in the medium at all (P < 0.05). Overall, hatching showed an irregular pattern, affected by the mode of response of the resting eggs to our experimental factors. The irregular hatching pattern may result in fairy shrimps better adapted to environmental instability.