Document Type

Working Paper

Publication Date

4-14-2013

Working Paper Number

WP #13009, April 2013

Abstract

Stochastic dominance (SD) is commonly used to rank income distribution and assess social policies. The literature argues that SD is a robust criterion for policy evaluation because it requires minimal knowledge of the social welfare function. We argue that, on the contrary, SD is not a robust criterion. We do this by carefully introducing microfoundations into a model by Chu and Koo (1990) who use SD to provide support to family-planning programs aiming at reducing the fertility of the poor. We show that fertility restrictions are generally detrimental for both individual and social welfare in spite of the fact that SD holds. Our findings are an application of the Lucas' Critique.

Publication Status

Published in Journal of Demographic Economics, Vol. 82 no. 1 (March 2016): 111-138.

JEL Classification

I10, I31, J17, O57

File Format

application/pdf

Length

41 pages

Included in

Economics Commons

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