skip to main content
US FlagAn official website of the United States government
dot gov icon
Official websites use .gov
A .gov website belongs to an official government organization in the United States.
https lock icon
Secure .gov websites use HTTPS
A lock ( lock ) or https:// means you've safely connected to the .gov website. Share sensitive information only on official, secure websites.

Explore Research Products in the PAR
It may take a few hours for recently added research products to appear in PAR search results.


Title: Subsidy Allocations in the Presence of Income Shocks
Poverty and economic hardship are understood to be highly complex and dynamic phenomena. Due to the multi-faceted nature of welfare, assistance programs targeted at alleviating hardship can face challenges, as they often rely on simpler welfare measurements, such as income or wealth, that fail to capture to full complexity of each family's state. Here, we explore one important dimension – susceptibility to income shocks. We introduce a model of welfare that incorporates income, wealth, and income shocks and analyze this model to show that it can vary, at times substantially, from measures of welfare that only use income or wealth. We then study the algorithmic problem of optimally allocating subsidies in the presence of income shocks. We consider two well-studied objectives: the first aims to minimize the expected number of agents that fall below a given welfare threshold (a min-sum objective) and the second aims to minimize the likelihood that the most vulnerable agent falls below this threshold (a min-max objective). We present optimal and near-optimal algorithms for various general settings. We close with a discussion on future directions on allocating societal resources and ethical implications of related approaches.  more » « less
Award ID(s):
1942497
PAR ID:
10204987
Author(s) / Creator(s):
; ;
Date Published:
Journal Name:
Proceedings of the AAAI Conference on Artificial Intelligence
Volume:
34
Issue:
05
ISSN:
2159-5399
Page Range / eLocation ID:
7032 to 7039
Format(s):
Medium: X
Sponsoring Org:
National Science Foundation
More Like this
  1. ; (, American Economic Journal: Macroeconomics)
    null (Ed.)
    We show that a calibrated life cycle two-earner household model with endogenous labor supply can rationalize the extent of consumption insurance against shocks to male and female wages, as estimated empirically by Blundell, Pistaferri, and Saporta-Eksten (2016) in US data. In the model, 35 percent of male and 18 percent of female permanent wage shocks pass through to consumption, compared to the empirical estimates of 32 percent and 19 percent. Most of the consumption insurance against permanent male wage shocks is provided through the presence and labor supply response of the female earner. Abstracting from this private intrahousehold income insurance mechanism strongly biases upward the welfare losses from idiosyncratic wage risk as well as the desired extent of public insurance through progressive income taxation. Relative to the standard one-earner life cycle model, the optimal degree of tax progressivity is significantly lower and the welfare gains from implementing the optimal system are cut roughly in half. (JEL D15, H21, H24, J16, J22, J31) 
    more » « less
  2. ; ; (, 13th Innovations in Theoretical Computer Science Conference (ITCS 2022))
    Braverman, Mark (Ed.)
    We develop approximation algorithms for set-selection problems with deterministic constraints, but random objective values, i.e., stochastic probing problems. When the goal is to maximize the objective, approximation algorithms for probing problems are well-studied. On the other hand, few techniques are known for minimizing the objective, especially in the adaptive setting, where information about the random objective is revealed during the set-selection process and allowed to influence it. For minimization problems in particular, incorporating adaptivity can have a considerable effect on performance. In this work, we seek approximation algorithms that compare well to the optimal adaptive policy. We develop new techniques for adaptive minimization, applying them to a few problems of interest. The core technique we develop here is an approximate reduction from an adaptive expectation minimization problem to a set of adaptive probability minimization problems which we call threshold problems. By providing near-optimal solutions to these threshold problems, we obtain bicriteria adaptive policies. We apply this method to obtain an adaptive approximation algorithm for the Min-Element problem, where the goal is to adaptively pick random variables to minimize the expected minimum value seen among them, subject to a knapsack constraint. This partially resolves an open problem raised in [Goel et al., 2010]. We further consider three extensions on the Min-Element problem, where our objective is the sum of the smallest k element-weights, or the weight of the min-weight basis of a given matroid, or where the constraint is not given by a knapsack but by a matroid constraint. For all three of the variations we explore, we develop adaptive approximation algorithms for their corresponding threshold problems, and prove their near-optimality via coupling arguments. 
    more » « less
  3. ; ; (, Econometrica)
    Many argue that minimum wages can prevent efficiency losses from monopsony power. We assess this argument in a general equilibrium model of oligopsonistic labor markets with heterogeneous workers and firms. We decompose welfare gains into anefficiencycomponent that captures reductions in monopsony power and aredistributivecomponent that captures the way minimum wages shift resources across people. The minimum wage that maximizes the efficiency component of welfare lies below $8.00 and yields gains worth less than 0.2% of lifetime consumption. When we add back in Utilitarian redistributive motives, the optimal minimum wage is $11 and redistribution accounts for 102.5% of the resulting welfare gains, implying offsetting efficiency losses of −2.5%. The reason a minimum wage struggles to deliver efficiency gains is that with realistic firm productivity dispersion, a minimum wage that eliminates monopsony power at one firm causes severe rationing at another. These results hold under an EITC and progressive labor income taxes calibrated to the U.S. economy. 
    more » « less
  4. ; ; ; ; (, IEEE Conference on Decision and Control Miami)
    This paper studies rooftop solar photovoltaic (PV) investment decisions of households. Two cases are considered: (a) the status quo of net-metering, and (b) a new sharing economy model. Under net-metering, households can sell back their excess generation to the utility at their retail tariff subject to the prevalent constraint that they cannot be net producers of electricity on an annual basis. In our sharing economy model, households can pool their excess PV generation and trade it in a spot market among themselves, but the collective cannot sell electricity back to the utility. Our objective in studying these two cases is that net-metering programs are under threat and being phased out, which places future residential PV investment at risk. In the event of this contingency, we argue that the sharing economy model offers a pathway to preserve and even accelerate residential PV investment. We derive expressions for the optimal investment decisions in each case assuming that households are rational and wish to minimize their costs. We characterize the random clearing price in the spot market for excess PV generation under the sharing model. We show that the optimal investment decisions are determined by a simple threshold policy. Households whose PV productivity metric exceeds this threshold invest the maximum possible, while those that fall below the threshold do not invest. We offer a convergent algorithm to compute this threshold. We close with a small-scale simulation study that reveals the favorable properties of the sharing economy model for residential PV investments. 
    more » « less
  5. ; ; ; (, Applied Economics)
    We examined whether floods and cyclones, the shocks that are transient in nature, affect interregional migration differently compared to riverbank erosion that causes loss of lands and thus generates permanent shocks. We tracked Household Income and Expenditure Survey 2000 participants in nine coastal districts of Bangladesh and collected further information in 2015. Our analyses suggest that both transient and permanent shocks induce households to migrate, but the effect is higher for the latter category. Using a difference-in-differences setting, we find that migrants’ income and expenditure increase relative to their counterparts, indicating that facilitating migration may improve welfare in disaster-prone countries. 
    more » « less
  • Citation Formats
  • MLA
  • APA
  • Chicago
  • BibTeX
  • Save / Share this Record
  • Send to Email