David Bigman

Geographical targeting of poverty alleviation programs: methodology and applications in rural India

The paper presents a methodology for mapping poverty within national borders at the level of relatively small geographical areas and illustrates this methodology for India. Poverty alleviation programs in India are presently targeted only at the level of the state. All states includes, however, many non-poor households, whereas many poor households who live in states that have not been selected for the targeted programs are left out. The paper applies the methodology for mapping poverty at the level of districts in India, thus increasing the target areas from the 24 states (with over 40 million people in each) to 466 districts (with only around 2 million people in each).

Safety-First Criteria and Their Measures of Risk

A cardinal measure of risk which represents the safety-first criteria is defined. The functional form of that measure is determined for a subgroup of risk-averse agents that do not have money illusion. An empirical illustration of possible applications of that measure shows a method of identifying the subgroup of agents for which a given alternative dominates the others—in a group of risky alternatives when none of these alternatives dominates any of the others according to the first and the second criteria of stochastic dominance. Copyright 1996, Oxford University Press.

Food Price and Supply Stabilization: National Buffer Stocks and Trade Policies

Trade policies are likely to have a greater impact on the stability of a countrys food grain supply than any reasonable size buffer stock. At the margin, countries need to trade off the cost of additional stocks against the cost of unstable foreign exchange balances associated with free trade. A stochastic simulation model is specified to assess the impact of trade and buffer stock policies on the stability of consumption and prices and the expected values and standard deviations of costs and gains to consumers, producers, and the government, and the balance of payments.

The anatomy of changes in poverty and income inequality under rapid inflation: Israel 1979–1984

Abstract During the period from 1979 to 1984, Israel experienced one of the highest rates of inflation in the world which peaked at more than 450 percent annually in 1984. Most incomes were protected, however, from the inpact of inflation by an elaborate system of indexation that included wages, the income tax structure and the social security benefits. Against this background, the year-to-year changes in income inequality and in poverty are analysed. It is shown that despite the spiralling inflation, there have been only small changes in the measures of income inequality through most of the period. In 1984, when the inflation rate tripled, income inequality—measured by the Gini Coefficient—rose by 8.8 percent and the Poverty Gap rose by 19.4 percent.

International trade and trade creation under instability

The paper examines the lasting and real effects of random, short-term fluctuations in supply and demand, that are expecially characteristic of agricultural products, on the countrys trade, welfare and income distribution. One effect of supply and demand variability is to considerably increase the trade flows over and above the trade generated by the countrys permanent comparative advantage. Another effect is enhanced production risk that may increase rather than decline with free trade. For some crops free trade may therefore be Pareto inferior to autarky while for others it would still be Pareto efficient — depending mostly on the corresponding price elasticity of demand.

Applied welfare analysis for consumers with commodity income

SummaryThe paper analyzes the relevance and validity of the economic surplus concept for consumers receiving their income in commodities. For these consumers, such as farmers in developing countries, it is shown that the measure of welfare gains or losses via the area under the Marshallian demand and supply curves may lead to a considerable error. The paper provides boundaries for the error of approximation as a function of the share of the product in the consumers budget and the income elasticity of demand.

Capital Intensity, Aggregation, and Consumption Behavior

I. The analytical framework, 691.—II. Capital intensity and aggregation, 695.—III. Regular consumption behavior, 700.—IV. Summary and conclusion, 703.

Fairness and efficiency in a collective enterprise

Abstract The distribution of the social product between non-identical members of a collective enterprise requires criteria of fairness that recognize not only the entitlement of each member to the output produce, but also the contribution of each member in working time and effort to the production of the social product. They must also recognize that in a collective enterprise the size of the social product itself is determined by the rules according to which it is distributed between its members. The paper examines guidelines for the selection of these rules in a collective enterprise that organizes the production and governs the distribution of the social product on the basis of predetermined rules specified in its constitution. Decisions on working time and effort are made, however, individually although they are influenced by the distribution rules themselves as well as by the individual choices between income and leisure. The paper explores also alternative organizational arrangements for the distribution of the social product and the work effort.

Semi-rational expectations and exchange-rate dynamics

Abstract The Rational Expectations Hypothesis (REH) asserts that, on average, the economic agents are accurate in predicting future economic developments. The paper demonstrates, however, that in a world of costly information, individual rationality may result in consistent and persistent forecasting biases. A distinction is drawn between perfect foresight or efficient forecasting—which is consistent with the REH—and myopic perfect foresight—which is the profit maximizing, and thus the rational one from an individualistic point of view, even though the latter may result in persistently biased forecasting. These concepts are illustrated in a model of exchange rate dynamics which introduces myopic or ‘semi’ rationality into Dornbuschs familiar model.

Planning stocks for emergency situations

This paper develops a methodological framework for designing and evaluating an emergency stock system aimed at supplying the needs of the population in the event that an emergency situation (drought, war, embargo) will not allow the regular flow of supply. The functioning of the emergency stock system is described as a stochastic process, assumed to be a Markov process and the stock size and storage rules are the control variables. The main performance criterion is the costs of attaining a certain level of reliability which is deemed necessary by the policy maker, where the systems reliability is defined as the probability that in all possible emergency situations, the amount in storage will suffice to meet the demand.