A robust normative evaluation of India's performance in allocating risks of death

Abstract

PurposeThe purpose of this paper is to provide a robust normative evaluation of the recent evolution of Indians' exposures to health‐related risks.Design/methodology/approachThe paper compares empirically the distributions of individuals' risks of death in India on the basis of new ethically robust criteria in 1995 and 2002. Probabilities of death are assigned individuals as an estimated probit function of several explanatory variables, including the individual's district of residence. The criteria used ranks distributions of individual risks in the same way as would all Von Neumann–Morgenstern (VNM) social planners who respect, in the usual Pareto sense – individuals VNM preferences over individual risks of death. Two criteria are considered in turn. The first criterion assumes that individuals' VNM utilities are increasing in money and value more a unit of money received in the bad state than one received in the good one. The second criterion makes the extra assumption that individuals are risk averse and have VNM utility functions that are more concave in the bad state than in the good one.FindingsIt is found that there is unanimity among all VNM social planners who respect individual VNM preference for considering that the distribution of risks of death in India was better in 2002 than in 1995. This is at least so if individuals can be assumed to prefer more money to less, to be risk averse, and to be more risk averse in the bad state than in the good one.Research limitations/implicationsA limitation of the empirical research of the paper is that it concerns only one kind of risk. Future research would apply the tools of this paper to other kinds of risks like risks of crime or risks of unemployment.Practical implicationsA practical implication of the paper is to illustrate the usefulness of robust dominance methodology to evaluate the outcome of various policies.Originality/valueThe novelty of the paper is to be one of the first to apply empirically new dominance criteria that are specifically designed to compare distributions of risks between individuals. It is certainly the first paper to apply the tool to appraise the distribution of risks of death in India.