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Relative measures of economic insecurity

Author

Listed:
  • Walter Bossert

    (University of Montreal)

  • Conchita D’Ambrosio

    (University of Luxembourg)

Abstract

We characterize a new class of individual measures of economic insecurity in a setting where there is a single relevant variable that can be interpreted as income or consumption. Insecurity is intended to capture the difficulties faced by an economic agent when confronted with adverse events. We work with an intertemporal model and base our measures on the changes in the variable when moving from one period to the next. Our approach is axiomatic and differs from the existing literature in two respects. First, we adopt a relative (scale-invariant) concept of insecurity and, second, we restrict attention to a relatively small set of requirements that we consider plausible and intuitively appealing. As a result, we identify a large class of measures that can be thought of as providing a tool box to empirical researchers who can select those members of our class that they consider suitable for the application in question. In addition, we present a dominance criterion based on our new insecurity measures.

Suggested Citation

  • Walter Bossert & Conchita D’Ambrosio, 2024. "Relative measures of economic insecurity," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 62(3), pages 571-581, May.
    • Handle: RePEc:spr:sochwe:v:62:y:2024:i:3:d:10.1007_s00355-024-01507-4
    DOI: 10.1007/s00355-024-01507-4
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    References listed on IDEAS

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    1. Andrew E. Clark & Anthony Lepinteur, 2022. "A Natural Experiment on Job Insecurity and Fertility in France," The Review of Economics and Statistics, MIT Press, vol. 104(2), pages 386-398, May.
    2. Walter Bossert & Conchita D'Ambrosio, 2013. "Measuring Economic Insecurity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54, pages 1017-1030, August.
    3. Catalano, R., 1991. "The health effects of economic insecurity," American Journal of Public Health, American Public Health Association, vol. 81(9), pages 1148-1152.
    4. Walter Bossert & Conchita D'Ambrosio, 2013. "Measuring Economic Insecurity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(3), pages 1017-1030, August.
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    Cited by:

    1. Richiardi, Matteo & Burdett, Ashley & He, Zhechun & Kolndrekaj, Aleksandra, 2026. "A Review of Economic Insecurity," Centre for Microsimulation and Policy Analysis Working Paper Series CEMPA9/26, Centre for Microsimulation and Policy Analysis at the Institute for Social and Economic Research.

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