The Rotterdam study

The poor often behave in less capable ways, which can further perpetuate poverty. We hypothesize that poverty directly impedes cognitive function and present two studies that test this hypothesis. First, we experimentally induced thoughts about finances and found that this reduces cognitive performance among poor but not in well-off participants. Second, we examined the cognitive function of farmers over the planting cycle. We found that the same farmer shows diminished cognitive performance before harvest, when poor, as compared with after harvest, when rich. This cannot be explained by differences in time available, nutrition, or work effort. Nor can it be explained with stress: Although farmers do show more stress before harvest, that does not account for diminished cognitive performance. Instead, it appears that poverty itself reduces cognitive capacity. We suggest that this is because poverty-related concerns consume mental resources, leaving less for other tasks. These data provide a previously unexamined perspective and help explain a spectrum of behaviors among the poor. We discuss some implications for poverty policy.

http://science.sciencemag.org/content/sci/341/6149/976.full.pdf

Poverty impedes cognitive function

the structure of welfare state institutions. (2) A trade-off exists between the degree of low-income targeting and the size of redistributive budgets. (3) Outcomes of market-based distribution are often more unequal than those of earnings-related social insurance programs. We argue that social insurance institutions are of central importance for redistributive outcomes. Using new data, our comparative analyses of the effects of different institutional types of welfare states on poverty and inequality indicate that institutional differences lead to unexpected outcomes and generate the paradox of redistribution: The more we target benefits at the poor and the more concerned we are with creating equality via equal public transfers to all, the less likely we are to reduce poverty and inequality. Social scientists and social reformers have long debated how the welfare state and social policies should be designed so as to best reduce poverty and inequality. This debate involves two different issues. One question concerns whether social policies should be targeted or universal, that is, should they be organized for the poor only or should the welfare state include all citizens? In the context of nontargeted programs, another question concerns the level of benefits: Should benefits be equal for all, or should they be related to previous earnings and in

https://www.econstor.eu/bitstream/10419/160846/1/lis-wps-174.pdf

The Paradox of Redistribution and Strategies of Equality: Welfare State Institutions, Inequality and Poverty in the Western Countries

Two decades after its original publication, The Analysis of Household Surveys is reissued with a new preface by its author, Sir Angus Deaton, recipient of the 2015 Nobel Prize in Economic Sciences. This classic work remains relevant to anyone with a serious interest in using household survey data to shed light on policy issues. This book reviews the analysis of household survey data, including the construction of household surveys, the econometric tools useful for such analysis, and a range of problems in development policy for which this survey analysis can be applied. The author's approach remains close to the data, using transparent econometric and graphical techniques to present data in a way that can clearly inform policy and academic debates. Chapter 1 describes the features of survey design that need to be understood in order to undertake appropriate analysis. Chapter 2 discusses the general econometric and statistical issues that arise when using survey data for estimation and inference. Chapter 3 covers the use of survey data to measure welfare, poverty, and distribution. Chapter 4 focuses on the use of household budget data to explore patterns of household demand. Chapter 5 discusses price reform, its effects on equity and efficiency, and how to measure them. Chapter 6 addresses the role of household consumption and saving in economic development. The book includes an appendix providing code and programs using STATA, which can serve as a template for the users' own analysis.

The analysis of household surveys

https://pure.uva.nl/ws/files/3441498/3261_30170y.pdf

Socioeconomic inequalities in morbidity and mortality in western Europe

The Luxembourg Income Study (LIS) database on which this article is based offers researchers exciting new possibilities for international comparisons based on household income microdata. Among the choices the LIS microdata allows a researcher, e.g. income definition, income accounting unit, etc., is the choice of family equivalence scale, a method for estimating economic well-being by adjusting income for measurable differences in need.

The range of potential equivalence scales that can and are being used in the ten LIS countries and elsewhere to adjust incomes for size and related differences in need span a wide spectrum. The purpose of this paper is to review the available equivalence scales and to test the sensitivity of various income inequality and poverty measures to choice of equivalence scale using the LIS database. The results of our analysis indicate that choice of equivalence scale can sometimes systematically affect absolute and relative levels of poverty; and inequality and therefore rankings of countries (or population subgroups within countries). Because of these sensitivities, one must carefully consider summary statements and policy implications derived from cross-national comparisons of poverty and/or inequality.

Equivalence scales, well‐being, inequality, and poverty: sensitivity estimates across ten countries using the luxembourg income study (lis) database

This paper reports the detailed results of a comparison of the distribution and redistribution of income in seven countries using the Luxembourg Income Study (LIS) database. Use of LIS facilitates comparisons of inequality in respect to similarly-defined variables, permits methodological alternatives to be used, and allows the countries to be compared on aspects of income ranking and policy equity in ways not otherwise possible.

The results indicate a pattern of inequality in which Sweden is the most equal, followed by Norway, the U.K. and Canada, while among the less equal countries Israel is generally more equal than Germany-or the USA., whose relative inequality depends on the measure chosen. Use of the LIS database also allows a more detailed explanation of these results, noting, for example, the role of cash benefits in increasing equality in Sweden and the U.K., and in aiding the bottom quintile in Germany; and the important part played by self-employment income in contributing to the high top quintile shares in Germany and Israel, and in rendering the Norwegian distribution less equal than that of its Scandinavian neighbour.

The wealth of the database, however, means that methodological issues need to be treated both more explicitly and more carefully than is possible with more restrictive data. To interpret the data also requires a considerable degree of knowledge about the institutional features of tax and social provisions in each country, so that an income microdatabase could usefully be completed by one focused on the details of such provisions.

Guenther Schmaus

Papers

Equivalence scales, well‐being, inequality, and poverty: sensitivity estimates across ten countries using the luxembourg income study (lis) database

Income distribution and redistribution: a microdata analysis for seven countries