Beyond Market Prices : Three Essays on Equity and Efficiency in Public Intervention

Abstract

Conventional economic analyses refer to inequality in terms of distribution of income and wealth, but a significant part of inequality of opportunities is due to differences in non-market outcomes like education and health. Two main issues characterize the evaluation of these phenomena. Unlike the case of the commercial sector, there is no obvious criterion, like profitability, in the objective function of the suppliers. Moreover, non-market good and services are provided free of charge or at prices that are economically insignificant. This thesis, by means of three essays, contributes to the literature focused on equity and efficiency in sectors that are typically out of the market. The first two chapters are specifically dedicated to education and health care, and the third chapter is devoted to multidimensional well-being. Synthesis of quantitative measures of outcome without market prices is the key aspect of all the evaluations proposed here. The analysis on the Italian National Health Service shows that in the last two decades there has been no convergence path in terms of health care outcome, neither between nor within regions, regardless of the weights given to the different dimensions. The analysis on Education Systems finds a significant effect of the Economic Social and Cultural Status on student performances, with a strong heterogeneity among countries. The analysis on Better Life Index in OECD shows that the local societal preferences play a relevant role in the evaluation. As further research, this thesis proves that many problems related to multidimensional phenomena out of market can be studied with Multi-Criteria Decision Analysis. Policy makers dealing with collective choices need tools to manage the multidimensionality of phenomena and the heterogeneity of individual preferences. The new tools proposed in this thesis combined with the new source of big data that are nowadays increasingly available, can certainly be a valid support for better-informed decisions and policy formulations. A holistic approach beyond market prices can help in understanding and managing the Market/Government relationships.