D61 - Allocative Efficiency; Cost-Benefit AnalysisNávrat zpět

The paper presents the volume of debts incurred as part of non-insurance social security benefits in the Czech Republic from 2016 to 2020 and defines the structure of these debts by individual types of non-insurance social security benefits, where 25% is attributable to parental allowance, followed by housing allowance (17%) and subsistence allowance (20%). The analysis deals with the number of debts broken down into paid, collected, settled by other means, written off for uncollectibility or extinction of the right. The study works with unique data obtained by summarisation from the appli-cation programmes used by the Labour Office of the Czech Republic, which showed a continuous decrease in total identified claims by 46% between 2016 and 2020. An analysis of time series and a regression and correlation analysis are performed in the paper. These methods confirm a decreasing trend in the number of total debts and a decreasing proportion of paid debts over time, in contrast to the ratio of outstanding debts, which has been increasing over time. Lastly, they also identify variability in the structure of social security benefits, i.e., inconsistency in the share of individual benefits over the period under review. Social expenditures are fundamental to state spending, but addressing their potential misuse is a sensitive political issue. From an economic perspective, this paradoxical situation leads to overlooking potential resources that could be potentially available through the elimination of purposeful exploitation of the social system, leaving the question of the frequency of purposeful claiming unanswered. Any potential political decision to reduce social expenditures, without an economic evaluation of the frequency and volume of purposefully claimed benefits from the social system, may not be optimal.

The author's main objective is to point out the existence of the paradox of involuntary improvement and to present a solution to this paradox. The paradox of involuntary improvement appears when a subject which suffers an injustice involuntarily still gets better off by this change. The suggested solution consists in the decomposition of the total effect of the pseudo-contract into the effect of the basic contract (which is desirable for the subject) and the effect of the super-contract (which is undesirable for the subject). Such a decomposition is not arbitrary, in the author's view, but necessary because it reflects the self-contradictory nature of the pseudo-contract, such as usury and sale/purchase at an unjust price. The author argues that the contract of usury and sale/purchase at an unjust price do not represent cases of Pareto improvement but rather cases of Kaldor-Hicks improvement (Kaldor, 1939; Hicks, 1939). The author's complementary objective is to show that the positive - normative dichotomy is an artificially created distinction which is supposed to cut off economics from its mother discipline, philosophy, and which moral sceptics used to deprive moral philosophy of the status of science.

Pareto efficiency plays the leading role throughout all branches of political economy. Frequently applied on various economic issues, Pareto efficiency decides on the optimal balance of resource distribution among economic agents. On the other hand, the current state of unequal distribution stimulates new economic researches to bring to light the relationship between market mechanism and observed inequality. The aim of the study is to provide a unique perspective on market-based inequalities which are derived from the self-preserving rationality of agents, and to prove that market mechanism inherently contains diverging forces. Additionally, it is showed that such divergences are not investigable by Pareto-optimization process; the process whose frequent misuse and misinterpretation obscures the general diverging drive of market mechanism and the process which may corrupt results of theoretical researches in the field.

Currently a considerable attention to the subject of network industries is being paid in discussions on various levels. It is understandable as network industries in fact ensure the production and distribution of energy sources which play a key role in developed economies. The discussions are usually focused on the question of reasonable profit of network industries subjects and on the other hand the question of generally acceptable costs. Equilibrium on the network industries market, as well as on any market, is being created based on the level of demand and supply on relevant market. In this article we will discuss the analysis of optimization models of consumers and producers behavior on the network industries market as well as the question of effectiveness of this specific market. We will point out certain features of network industries market where the consumer usually is not able to substitute a product of network industry with other product of appropriate characteristics in a short time period, thus considering the product being exclusive. This exclusivity can be formally represented in the utility function and other related analytical tasks. In paper we study the properties of a network industry optimization problem and economically interpretable implications of Kuhn-Tucker optimality conditions of this model.

The article contests an argument that the creation of a capital market in educational "human capital" and subsequent voluntary transactions on this market are sufficient to create equal opportunities in education, consequently reducing the income premium enjoyed by households with higher initial wealth endowment end eliminating deadweight detriments to efficiency caused by unequal household budget constraints. The counterargument is based on game-theoretical model developed in Bowles 2004. The inevitable incompleteness of contracts results in allocation inefficiency: agents with above average wealth endowment are able to finance larger projects, and/or projects of worse than average quality, while agents with insufficient initial wealth endowment are excluded from the financial market. This inefficiency can be attenuated only by redistribution enforced by the government. The article concludes with a discussion of the general relationship between equality (redistribution) and efficiency.

A social rate of discount is an important variable for cost-benefit analysis. Its size can be crucial for an approval (or disapproval) of the project under evaluation, therefore it is important to have a theoretically founded estimate of the discount rate. There are two main approaches to estimating the social rate of discount. The first one is a so called social time preference rate (STPR), which is composed of three components: pure time preference, mortality rate and a component reflecting secular growth of per capita consumption and wealth. We agree with other authors that although pure time preference is not in reality zero for individuals due to myopia and irrationality, it should be equal to zero from the point of view of the public sector. We have also shown why it is inconsistent to use mortality rate directly as a component of the STPR and why a somewhat lower rate should be used instead. These two components together with an estimate of gradually decreasing growth of per capita consumption give a gradually decreasing STPR for the Czech Republic starting at 5.4 % and converging in 40 years' period to 2.8 % per year. The other approach to estimating the social discount rate is based on social opportunity costs (SOC). We used long-term bond yields for estimating a certainty equivalent social discount rate. We found gradually decreasing discount rate as appropriate, which starts at 3.2 % and declines by 0.016 percentage points per every year of duration of the project.

The authors' approach to the ethical and political aspects of inter-temporal interactions is the following: 1) Two representative agents Ra and Râ are analyzed and asymmetries in their wealth and voting powers are dealt with by a the text-book tool of a welfare function - its intra and inter-temporal application. 2) A generalized concept of a distance (measured in miles and years, respectively) is to indicate to what extend similarities and differences can be reasonably expected between Ra and Râ - their interests and values. With respect to a given distance, a discount factor then represents the weight that Ra ascribes to the well-being of his counter-party Râ. 3) In the intra-temporal case, the intuitive appeal of the concepts of solidarity, justice and discrimination is accepted, as well as the resultant transfers of wealth from the richer Ra" to his relatively poorer contemporary fellow Râ. 4) Contrariwise, the very concepts easily loose sense in the inter-temporal case. The arguments for this difference are that: (a) the same person may act as both Ra and Râ; the future Râ may be but a new sample of a given man, household, firm, nation … or even mankind itself, (b) wealth is likely to grow with the time-distance between the future Râ and the present decision maker Ra, (c) unlike the geographical distance, a time horizon is infinite; the future Râ may exist whenever - 10 days, 20 months or 17 000 years from now, (d) an interest rate or investment possibilities affect the present Ra's wealth or budget constraint. 5) With the level of aggregation of Ra and Râ, the analytical problems become still more eminent. Should then the two agents represent a mankind as a whole, it appears impossible to identify at what point of the future Râ lives - even if we managed to interpret the interests and preferences of us all today as Ra. A message is passed to natural scientists that they cross over to social analyses whenever they add valuations to their data - in a form of warnings not to mention regulatory proposals - and that as visitors they should respect the state of art of the contemporary social science, including its genuine advisory capacity, namely to globally established policy-makers. Hence, any regulatory constraint on our liberties and freedoms must be always viewed as an outcome of a political struggle - never then as a victory of a modern science, as the currently prevailing rhetoric may suggest.

Currently, if speaking about the theoretical background of the environmental policy, most of environmental economists have neoclassical economics in their minds. State regulation of private activities by means of restrictions, commands, taxes and fees is usually seen as the only one way to reach the high quality of the environment. It is believed, that due to market failures market forces are not able to solve the environmental problems. Actually, these are the main arguments for state interventions into the private negotiations about environmental issues. But are these assumptions correct from the methodological point of view? Is the state regulation really the only one way to solve the environmental problems? In this paper we try to signify the main methodological problems of neoclassical economics and to identify, how to solve environmental problems from the point of view of other economic school of thoughts. The development of theoretical aspects of environmental issues was not fetched up in 60's. and 70's with neoclassical conclusions, but it continued in 80's and 90's with free-market-environmentalism. This theoretical background contains the methodology of Austrian school of thoughts, Public Choice theory and new institutional economics. In the present environmental policy, theoretical conclusions of these school of thoughts are (intentionally) marginalized. At the end of this paper we discuss the interdependence between environmental degradation and economic growth. Is the economic growth bad or good for environmental protection? To answer this question we follow the modeling approach.