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Risk, wellbeing and public policy

Author

Listed:
  • Subho Banerjee

    (Treasury, Government of Australia)

  • Robert Ewing

    (Treasury, Government of Australia)

Abstract

This article explores the relationship between risk and wellbeing, and the implications for public policy. Risk is an important dimension of wellbeing in its own right. People have different risk preferences, so policies to improve the match between preferences and risk actually borne have the potential to improve wellbeing. However, policies that affect risk often have significant trade-offs in other dimensions of wellbeing. Overall, a more sophisticated understanding of risk can make an important contribution to deliberations across almost the full range of government policy areas.

Suggested Citation

  • Subho Banerjee & Robert Ewing, 2004. "Risk, wellbeing and public policy," Economic Roundup, The Treasury, Australian Government, issue 2, pages 21-44, August.
    • Handle: RePEc:tsy:journl:journl_tsy_er_2004_2_2
    as

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    File URL: http://archive.treasury.gov.au/documents/876/PDF/Risk_wellbeing_public_policy.pdf
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    References listed on IDEAS

    as
    1. Kenneth J. Arrow & Robert C. Lind, 1974. "Uncertainty and the Evaluation of Public Investment Decisions," Palgrave Macmillan Books, in: Chennat Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, chapter 3, pages 54-75, Palgrave Macmillan.
    2. Joseph E. Stiglitz, 2002. "Information and the Change in the Paradigm in Economics," American Economic Review, American Economic Association, vol. 92(3), pages 460-501, June.
    3. Joseph E. Stiglitz, 1991. "Perspectives on the role of government risk-bearing," Proceedings, Federal Reserve Bank of Cleveland, pages 109-130.
    4. Robert C. Merton, 1983. "On the Role of Social Security as a Means for Efficient Risk Sharing in an Economy Where Human Capital Is Not Tradable," NBER Chapters, in: Financial Aspects of the United States Pension System, pages 325-358, National Bureau of Economic Research, Inc.
    5. Rothschild, Michael & Stiglitz, Joseph E., 1971. "Increasing risk II: Its economic consequences," Journal of Economic Theory, Elsevier, vol. 3(1), pages 66-84, March.
    6. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    7. Diamond, P. A. & Mirrlees, J. A., 1978. "A model of social insurance with variable retirement," Journal of Public Economics, Elsevier, vol. 10(3), pages 295-336, December.
    8. Kaplow, Louis, 1991. "Incentives and Government Relief for Risk," Journal of Risk and Uncertainty, Springer, vol. 4(2), pages 167-175, April.
    9. Craig R. Fox & Amos Tversky, 1995. "Ambiguity Aversion and Comparative Ignorance," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 585-603.
    10. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Freya Bundey, 2015. "The Financialized Household and the Consumer Price Index," Review of Radical Political Economics, Union for Radical Political Economics, vol. 47(4), pages 625-640, December.

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    More about this item

    Keywords

    empowerment; freedom; individual choices; quality of life; welfare;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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