Untitled Flashcards Set

What is the poverty line according to the EU definition?

60% of the median equivalent income.

How do you calculate AROP?

(Number of people below the poverty line / total population) × 100.

How do you calculate the poverty gap?

(Poverty line − average income of the poor) / poverty line × 100.

How do you calculate the HDI?

Average of normalized scores: life expectancy, education, income (log transformation).

What is a Lorenz curve?

Graph of cumulative income versus cumulative population.

How do you graphically calculate the Gini coefficient?

Area A / (A + B) between the Lorenz curve and the line of perfect equality.

How do you calculate net income?

Gross income − taxes + benefits.

What is the METR?

Marginal effective tax rate = additional tax on additional euro income / additional income.

What is the PTR?

Participation tax rate = (taxes + loss of benefits upon starting work) / gross wage when working.

How do you demonstrate deadweight loss due to tax?

Triangle between demand and supply between quantity before and after tax.

How do you calculate expected loss for insurance?

Probability × loss amount.

How do you calculate a fair insurance premium?

Expected loss (optionally + risk premium).

How do you calculate expected utility with insurance?

E(U) = p × U(income − loss − premium) + (1 − p) × U(income − premium).

What is adverse selection?

Only risky individuals purchase insurance, leading to higher premiums.

What is moral hazard?

Careless behavior due to the existence of insurance.

What is Pareto efficiency?

No improvement possible for someone without hurting someone else.

How do you calculate deadweight loss?

0.5 × (Q1 − Q2) × (price difference between producer and consumer).

How do you calculate a Pigouvian tax?

Social marginal cost − private marginal cost at the optimal output level.

What is the difference between mitigation and adaptation?

Mitigation = addressing causes, adaptation = coping with consequences.

Name 5 dimensions of climate justice.

Responsibility, vulnerability, capacity, inequality, generations.

What is the effect of an in-work benefit like EITC?

Increases the incentive to work by providing an income bonus per hour worked.

What is the difference between ALMP and PLMP?

ALMP = active labor market policies, PLMP = passive income support without activation.

Why does private health insurance often work poorly?

Due to information asymmetry: adverse selection and moral hazard.

How does the Belgian healthcare system operate?

Publicly funded, privately produced.

What does pass-through of free emission rights mean?

Companies pass the value onto product prices, even if they received rights for free.

Why did companies achieve excess profits via EU ETS?

They received more rights than necessary, allowing them to sell excess for profit.

What is an example of market intervention with public goods?

Government produces or finances the good (e.g., defense, lighthouse).

What is microsimulation?

Simulating policies on household data to calculate effects.

What is a meta-analysis?

Summary of effects from multiple empirical studies.

What is counterfactual analysis?

Analyzing 'what would have happened without the policy?' via control group.

What is the difference between first-order and second-order effects?

First-order = mechanical effect without behavioral adjustment; second-order = with behavior effect.