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Removing the Veil of Ignorance in Assessing the Distributional Impacts of Social Policies

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  • Pedro Carneiro
  • Karsten T. Hansen
  • James J. Heckman

Abstract

This paper summarizes our recent research on evaluating the distributional consequences of social programs. This research advances the economic policy evaluation literature beyond estimating assorted mean impacts to estimate distributions of outcomes generated by different policies and determine how those policies shift persons across the distributions of potential outcomes produced by them. Our approach enables analysts to evaluate the distributional effects of social programs without invoking the 'Veil of Ignorance' assumption often used in the literature in applied welfare economics. Our methods determine which persons are affected by a given policy, where they come from in the ex-ante outcome distribution and what their gains are. We apply our methods to analyze two proposed policy reforms in American education. These reforms benefit the middle class and not the poor.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8840.

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Date of creation: Mar 2002
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Publication status: published as Carneiro, Pedro, Karsten T. Hansen, and James J. Heckman. "Removing the Veil of Ignorance in Assessing the Distributional Impacts of Social Policies." Swedish Economic Policy Review 8, 2 (Fall 2001): 273-301.
Handle: RePEc:nbr:nberwo:8840

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  1. John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 63, pages 309.
  2. James J. Heckman & Edward Vytlacil, 2005. "Structural Equations, Treatment Effects and Econometric Policy Evaluation," NBER Working Papers 11259, National Bureau of Economic Research, Inc.
  3. James J. Heckman & Jeffrey A. Smith, 1998. "Evaluating the Welfare State," NBER Working Papers 6542, National Bureau of Economic Research, Inc.
  4. Sen, Amartya, 2000. "Social justice and the distribution of income," Handbook of Income Distribution, Elsevier, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 1, pages 59-85 Elsevier.
  5. Kane, Thomas J, 1994. "College Entry by Blacks since 1970: The Role of College Costs, Family Background, and the Returns to Education," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(5), pages 878-911, October.
  6. Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198292975, October.
  7. James J. Heckman, 1999. "Accounting for Heterogeneity, Diversity, and General Equilibriumin Evaluating Social Programs," NBER Working Papers 7230, National Bureau of Economic Research, Inc.
  8. Heckman, James J & Honore, Bo E, 1990. "The Empirical Content of the Roy Model," Econometrica, Econometric Society, Econometric Society, vol. 58(5), pages 1121-49, September.
  9. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  10. James J. Heckman, 2001. "Micro Data, Heterogeneity, and the Evaluation of Public Policy: Nobel Lecture," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 109(4), pages 673-748, August.
  11. Bjorklund, Anders & Moffitt, Robert, 1987. "The Estimation of Wage Gains and Welfare Gains in Self-selection," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 42-49, February.
  12. Heckman, James J, 1990. "Varieties of Selection Bias," American Economic Review, American Economic Association, American Economic Association, vol. 80(2), pages 313-18, May.
  13. James J. Heckman & Edward J. Vytlacil, 2000. "Local Instrumental Variables," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0252, National Bureau of Economic Research, Inc.
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