Valentino Dardanoni | Università degli Studi di Palermo (original) (raw)

Papers by Valentino Dardanoni

RePEc: Research Papers in Economics, Apr 19, 2011

ABSTRACT The primary aim of the paper is to place current methodological discussions in macroecon... more ABSTRACT The primary aim of the paper is to place current methodological discussions in macroeconometric modeling contrasting the ‘theory first’ versus the ‘data first’ perspectives in the context of a broader methodological framework with a view to constructively appraise them. In particular, the paper focuses on Colander’s argument in his paper “Economists, Incentives, Judgement, and the European CVAR Approach to Macroeconometrics” contrasting two different perspectives in Europe and the US that are currently dominating empirical macroeconometric modeling and delves deeper into their methodological/philosophical underpinnings. It is argued that the key to establishing a constructive dialogue between them is provided by a better understanding of the role of data in modern statistical inference, and how that relates to the centuries old issue of the realisticness of economic theories.

Working paper series, Oct 1, 1998

In this paper, we expound the idea that horizontal inequity (HI) in different tax systems be comp... more In this paper, we expound the idea that horizontal inequity (HI) in different tax systems be compared by transplanting the HI from one tax system into the other, as a mapping between its pre- and post-tax living standard distributions, and then applying known results to compare the extent of association present in the two joint distributions. We make this idea operational by means of axioms which, we show, lead to an implementable procedure based on the `copula'. Statistical inference procedures are discussed, and illustrative empirical exercises are undertaken for the UK, Canadian and Israeli tax and benefit systems.

Journal of Risk and Insurance, Nov 10, 2016

In two important recent papers, Finkelstein and McGarry [25] and Finkelstein and Poterba [28] pro... more In two important recent papers, Finkelstein and McGarry [25] and Finkelstein and Poterba [28] propose a new test for asymmetric information in insurance markets that considers explicitly unobserved heterogeneity in insurance demand. In this paper we propose an alternative implementation of the Finkelstein-McGarry-Poterba test based on the identification of unobservable types by use of finite mixture models. The actual implementation of our test follows some recent advances on marginal modelling as applied to latent class analysis; formal testing procedures for the null of asymmetric information and for the hypothesis that private information is indeed multidimensional can be performed by imposing restrictions on the behavior of these unobservable types. To show the potential applicability of our approach, we look at the long term insurance market as analyzed in Finkelstein and McGarry [25], where we also find strong evidence for both asymmetric information and multidimensional unobserved heterogeneity.

Bulletin of Economic Research, 1986

The RAND Journal of Economics, Nov 1, 2016

We consider the welfare loss of unpriced heterogeneity in insurance markets, which results when p... more We consider the welfare loss of unpriced heterogeneity in insurance markets, which results when private information or regulatory constraints prevent insurance companies to set premiums reflecting expected costs. We propose a methodology which uses survey data to measure this welfare loss. After identifying some "types" which determine expected risk and insurance demand, we derive the key factors defining the demand and cost functions in each market induced by these unobservable types. These are used to quantify the efficiency costs of unpriced heterogeneity. We apply our methods to the US Long-Term Care and Medigap insurance markets, where we find that unpriced heterogeneity causes substantial inefficiency.

RePEc: Research Papers in Economics, May 1, 2013

RePEc: Research Papers in Economics, 1987

RePEc: Research Papers in Economics, 2007

In this paper we investigate the problem of measuring social mobility when the social status of i... more In this paper we investigate the problem of measuring social mobility when the social status of individuals is given by their rank. In order to sensibly represent the rank mobility of subgroups within a given society, we address the problem in terms of partial permutation matrices which include standard ("global") matrices as a special case. We first provide a characterization of a partial ordering on partial matrices which, in the standard case of global matrices, coincides with the well-known "concordance" ordering. We then provide a characterization of an index of rank mobility based on partial matrices and show that, in the standard case of comparing two global matrices, it is equivalent to Spearman's index.

RePEc: Research Papers in Economics, Dec 1, 1999

In this note I consider a simple proof of Arrow's Impossibility Theorem (Arrow 1963). I start wit... more In this note I consider a simple proof of Arrow's Impossibility Theorem (Arrow 1963). I start with the case of three individuals who have preferences on three alternatives. In this special case there are 13 3 = 2197 possible combinations of the three individuals' rational preferences. However, by considering the subset of linear preferences, and employing the full strength of the IIA axiom, I reduce the number of cases necessary to completely describe the SWF to a small number, allowing an elementary proof suitable for most undergraduate students. This special case conveys the nature of Arrow's result. It is well known that the restriction to three options is not really limiting (any larger set of alternatives can be broken down into triplets, and any inconsistency within a triplet implies an inconsistency on the larger set). However, the general case of n 3 individuals can be easily considered in this framework, by building on the proof of the simpler case. I hope that a motivated student, having mastered the simple case of three individuals, will nd this extension approachable and rewarding. This approach can be compared with the traditional simple proofs of Barber a (1980), Blau (1972),

RePEc: Research Papers in Economics, May 1, 2011

This paper considers estimation of a linear regression model using data where some covariate valu... more This paper considers estimation of a linear regression model using data where some covariate values are missing but imputations are available to fill-in the missing values. The availability of imputations generates a trade-off between bias and precision in the estimators of the regression parameters: the complete cases are often too few, so precision is lost, but filling-in the missing values with imputations may lead to bias. We provide the new Stata command gmi which allows handling such bias-precision trade-off using either model reduction or model averaging techniques in the context of the generalized missing-indicator approach recently proposed by Dardanoni et al. (2011). If multiple imputations are available, our gmi command can be also combined with the built-in Stata prefix mi estimate to account for the extra variability due to the imputation process. The gmi command is illustrated with an empirical application which investigates the relationship between an objective health indicator and a set of socio-demographic and economic covariates affected by substantial item nonresponse.

RePEc: Research Papers in Economics, May 25, 2017

We study the problem of recovering the distribution of cognitive characteristics in a population ... more We study the problem of recovering the distribution of cognitive characteristics in a population of boundedly rational agents from their aggregate choices. In contrast to much of the theoretical literature on bounded rationality, we make use of choices from a fixed menu of alternatives rather than from a rich collection of menus. We examine in detail two models of choice with limited attention, and we show that both "consideration probability" and "consideration capacity" distributions are substantially identified by aggregate choice shares. These two models are applied to data on over-the-counter painkiller sales, yielding concurrent estimates that on average two or three out of the eight available products are considered in this market. We also demonstrate how our framework can be used "counterfactually" for welfare analysis.

Journal of Econometrics, Jun 1, 2011

A common problem in applied regression analysis is that covariate values may be missing for some ... more A common problem in applied regression analysis is that covariate values may be missing for some observations but imputed values may be available. This situation generates a trade-off between bias and precision: the complete cases are often disarmingly few, but replacing the missing observations with the imputed values to gain precision may lead to bias. In this paper we formalize this trade-off by showing that one can augment the regression model with a set of auxiliary variables so as to obtain, under weak assumptions about the imputations, the same unbiased estimator of the parameters of interest as complete-case analysis. Given this augmented model, the bias-precision trade-off may then be tackled by either model reduction procedures or model averaging methods. We illustrate our approach by considering the problem of estimating the relation between income and the body mass index (BMI) using survey data affected by item non-response, where the missing values on the main covariates are filled in by imputations.

This paper studies the relationship between students' cognitive ability and their school grades; ... more This paper studies the relationship between students' cognitive ability and their school grades; and in particular, how the institutional context (e.g. nationwide external exams) influences the informative value of grades as signals of cognitive competence. In a simple abstract model of students' valuation we show that unless competence standards are set at above-school level or variation of competence across schools is low, students' competence valuation will be heterogeneous, with weaker schools inflating grades or flattening their dependence on competence, therefore reducing the information content and comparability of school grades. The theoretical model is applied to data from the PISA 2003 survey in a sample of 5 countries, namely Australia, Germany, Italy, The Netherlands and the USA. According to our estimates, in Australia and the USA schools heterogeneity does not affect grading practices; in the other countries grades are inflated in weaker schools, uniformly in Germany and The Netherlands, to a larger extent for weaker students in Italy.

Abstract. We address the problem of estimating generalized linear models (GLMs) when the outcome ... more Abstract. We address the problem of estimating generalized linear models (GLMs) when the outcome of interest is always observed, the values of some covariates are missing for some observations, but imputations are available to fill-in the missing values. Under certain conditions on the missing-data mechanism and the imputation model, this situation generates a trade-off between bias and precision in the estimation of the parameters of interest. The complete cases are often too few, so precision is lost, but just filling-in the missing values with the imputations may lead to bias when the imputation model is either incorrectly specified or uncongenial. Following the generalized missing-indicator approach originally proposed by Dardanoni et al. (2011) for linear regression models, we characterize this bias-precision tradeoff in terms of model uncertainty regarding which covariates should be dropped from an augmented GLM for the full sample of observed and imputed data. This formulatio...

Journal of Political Economy

Mixture choice data consist of the joint distribution of choices of a group of agents from a coll... more Mixture choice data consist of the joint distribution of choices of a group of agents from a collection of menus, comprising the implied stochastic choice function plus any cross-menu correlations. When agents are heterogeneous with respect to both preferences and other aspects of cognition, we show that these two determinants of behavior are identified simultaneously by suitable mixture choice data. We also demonstrate how this finding can be extended to allow for specialized assumptions about cognition, focusing on models of random satisficing thresholds and "quantal Fechnerian" choice.

Research Papers in Economics, Apr 1, 2013

Is there a trade-o between people's preference for income equality and income mobility? Testing f... more Is there a trade-o between people's preference for income equality and income mobility? Testing for the existence of such a trade-o is dicult because mobility is a multifaceted concept. We analyse results from a questionnaire experiment based on simple precise concepts of income inequality and income mobility. We nd no direct trade-o in preference between mobility and equality, but an indirect trade-o, applying when more income mobility can only be obtained at the expense of some income inequality. Mobility preference but not equality preference appears to be driven by personal experience of mobility. • Acknowledgements. We thank Anat Alexandron, Latika Sharma and Yinfei Dong for research assistance.