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New Directions in Welfare OECD 6-8 July 2011, Paris Theories of justice and the measurement of well-being Guillermo Alves

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Title: New Directions in Welfare OECD 6-8 July 2011, Paris Theories of justice and the measurement of well-being Guillermo Alves


1
New Directions in WelfareOECD6-8 July 2011,
ParisTheories of justice and the measurement
of well-beingGuillermo Alves Matías Brum
Andrea VigoritoInstituto de EconomíaUniversidad
de la República - Uruguay
2
Motivation
  • Recent discussion on the dimensions to be
    considered for comparisons across countries, held
    internationally (Sarkozy commision, UNDP, World
    Bank, Foro Consultivo Mexico)
  • Availability of international indexes (Better
    Life Index, Human Development Index, Human
    Opportunity Index)
  • Available measures consider different dimensions
    and use different aggregation procedures, leading
    to different country rankings
  • Main indexes (GDP, BLI, HDI) and measures exclude
    important items in their calculation
  • Inequality (lacking in HDI until 2009, BLI soon)
  • Agency/Autonomy (though UNDP has made attempts)
  • Uruguay local discussion on how to measure the
    impact of the recent redesign of the social
    protection system

3
Correlations btw diff rankings of OECD countries
Correlations between HDI, GNI BLI rankings Correlations between HDI, GNI BLI rankings Correlations between HDI, GNI BLI rankings Correlations between HDI, GNI BLI rankings
HDI GNI BLI
HDI 1
GNI 0.735 1
BLI 0.809 0.826 1
4
  • Main purposes
  • Principles underlying social indicators
  • Theories of justice and the dimensions of
    well-being a proposal
  • An empirical exercise
  • - International rankings a
    comment
  • - Trends an application to
    Uruguay
  • Final comments

Outline of the presentation
5
Main purposes
  • Drawing from the main contemporary approaches to
    justice and justice theories, discuss which
    dimensions should be taken into account for
    well-being comparisons
  • For each approach, identify the informational
    basis needed in order to make comparisons. This
    implies
  • Choosing relevant indicators
  • Choosing a combination procedure for the
    indicators
  • Approaches covered in our paper
  • Utilitarism, Welfarism, Libertarianism,
    Egalitarian liberalism (Rawls, Dworkin), Equality
    of Opportunities (Roemer), Capabilities Approach
    (Sen)
  • Stress the importance of inequality as an
    important (even central) feature to be taken into
    account when comparing countries

6
Principles underlying social indicators
  • Principles guiding the system (Atkinson et al,
    2002)
  • Balance among the different dimensions
  • Consistency among components
  • Transparent and accessible for all systems
  • Levels of importance must be determined
  • Principles guiding individual indicators
    (Atkinson et al, 2002)
  • Identify the essence of the problem and have a
    clear normative interpretation
  • Robust and statistically validated
  • Responsive to policy interventions but not
    subject to manipulation
  • Comparable at international standards
  • Timely and susceptible to revision
  • Required data should not impose a large burden to
    states or statistical offices
  • Databases to be considered
  • Household , individual surveys microdata
  • Firms and organizations microdata
  • National accounts system data
  • Administrative records, laws, decrees, norms

7
  1. Theories of justice and the dimensions of
    well-being a proposal

8
  • III.1 Utilitarianism and Welfarism
  • Both approaches base interpersonal comparisons on
    subjective well-being
  • Nevertheless, for a long time interpersonal
    comparisons carried out in Economics used data on
    income or consumption
  • Recently, subjective evaluation has been favoured
    by a stream of the economics profession led by
    the new Economics of hapiness.
  • Whereas Utilitarianism considers aggregate
    utility, Welfarism considers also its inequality
    or dispersion.

9
  • III.1 Utilitarianism and Welfarism

Dimension Indicator
Subjective Well-being Happiness / Life satisfaction of individuals that declare being very satisfied or satisfied with their lives
Subjective Well-being Adjustment among desires and their satisfaction Life satisfaction by domain and ranking carried out by interviewee
Subjective Well-being Perception of economic situation of individuals that perceive it as good or very good
Objective well-being Wealth Average and SD of a durable goods index.
Objective well-being Income Per capita average household income. Gini index. Generalized Lorenz curves.
Objective well-being Consumption Per capita average expenditure and Gini index of per capita expenditure.
  • Utilitarianism as sum of individual utility
  • Welfarism as inequality in utility

10
III.2 Libertarianism (Nozick)
  • Assesses first generation civil and political
    rights, economic freedom and property rights
  • Regarding negative freedoms, egalitarian
    treatment relies in the supression of all
    barriers to these freedoms
  • Main dimensions considered under this approach
    are
  • The warranty of fundamental freedoms
  • The vigency of a judicial system
  • Circulation freedom
  • Freedom of expression, asociation, right to
    strike and demonstrations
  • Economic freedom
  • Warranty of property rights

11
III.2 Libertarianism (Nozick)
Dimension Indicator
Vigency of a judicial system Existence of an independent judicial power
Vigency of a judicial system Productivity of the judicial power
Limits to economic freedom Economic freedom index
Limits to expression freedom Position in the international ranking of the Press freedom index
Warranty by the state of fundamental freedoms Existence of discriminatory laws against population groups
Interference of the government in the economy Tax burden
Interference of the government in the economy Public expenditure in defense as of public expenditure
Interference of the government in the economy Social expenditure as a of public expenditure
Interference of the government in the economy Presence of public monopolies
Limits to property rights Existence of norms that limit property rights taxes, assaults by 100.000 inhabitants
Limits to right to life Homicide rates for 100.000 inhabitants
Limits to economic freedom Laws or regulations against the right of association, demonstration or citizen participation
12
  • III.3 Egalitarian Liberalism (Rawls)
  • Rawls two justice principles establish the
    ground for comparisons
  • The first principle implies that basic freedoms
    are above the rest of the dimensions
    (lexicographic priority)
  • The second principle is twofold establishes two
    conditions that are necessary for tolerance, and
    to prevent situations of social inequality
  • - Equality of possibilities to access jobs
    and positions
  • - Difference principle inequalities need to
    turn into a major benefit to the less advantaged
    members of society.
  • Dimensions access to primary goods
  • - Social basis of self-respect
  • - Wealth
  • - Income
  • Operationalization has many caveats
  • - Identification of less advantaged groups
  • - Unidimensionality of disadvantage (based on
    income only)
  • - Tolerance to high inequality levels (without
    contradicting the Difference Principle)

13
Lexicografic priority to basic freedoms
Dimension Indicator
Vigency of a judicial system Existence of an independent judicial power
Vigency of a judicial system Productivity of the judicial power
Limits to economic freedom Economic freedom index
Limits to expression freedom Position in the international ranking of the Press freedom index
Warranty by the state of fundamental freedoms Existence of discriminatory laws against population groups existence of norms that allow slavery.
Limits to right to life Homicide rates for 100.000 inhabitants
Limits to the freedom of association Laws and regulations that restrict the freedom of association
Existence of laws that regulate competition Existence of institutions and laws that regulate competition
Validity of a constitution that Warranties equality of opportunity Indicators based on rights warranted in the constitution
Validity of property rights Indicators based on the norms on property rights and their limitations
14
Equal access to positions and the difference
principle
Dimension Indicator
Equal access to positions Proportion of public and private work positions subject to open competition (total and by educational attainment required)
Income gap by gender and education Average hourly labor earnings by gender and schooling
Income Average GDP and per capita household income
Income Income distribution by quantiles
Income Average household income before public transfers compared to the poverty line
Income FGT indexes (0, 1, 2)
Income Type I and II errors in public transfers targeting
Wealth Average wealth index
Wealth Wealth distribution by quantiles
Wealth Evolution of the average wealth of the first quantile
Taxation Average tax burden and progressivity of the tax system
Public transfers of public transfers relative to GDP
15
III.4. Roemers equality of opportunity
  • This approach distinguishes between
    circumstances (out of control of the individual)
    and effort. Only inequality due to differences
    caused by external circumstances is unfair.
  • The isolation of the portion of inequality due to
    external circumstances is a difficult task as
    long as effort is correlated with circumstances
  • Recent attempts of operationalization include
    i) ex-ante and ex-post approaches ii) parametric
    and non parametric decompositions of inequality
    (Ferrando, 2011)
  • In this proposal we concentrate in providing
    indicators that can approximate inequality of
    opportunity
  • The selection of the relevant dimensions is a
    key issue, although it has been less
    controvertial than in the capabilities approach
  • The dimensions that have been currently used in
    empirical literature are health, work, education
    and income

16
  • III.5 Capabilities approach (Sen
    Nussbaum)
  • This approach considerably broadens the
    informational basis used to carry out
    interpersonal comparisons
  • Sen separates well-being (functionings and
    capabilities) and agency
  • Within the CA, there are different positions in
    relation to the dimensions to be considered in
    well-being and agency assessments. Whereas Sen
    leaves this task to communities and researchers,
  • Nussbaum advocates for the definition of a list
    of universal combined capabilities. Alkire and
    Robeyns also argue for the existence of a list
    but not necessary the Nussbaum one.
  • This approach has significant operationalization
    problems

17
Freedom indicators additions to egalitarian
liberalism
Dimension Indicator
Civil society organization Associativeness index
Civil society organization Conflict index
Civil society organization Existence of trade unions and entrepreneur associations, and affiliation rate
Civil society organization Existence and evolution of the number of NGOs
Civil society organization Existence and evolution of the number of neighborhood organizations, parents associations, women associations, affirmative action organizations on sexual and ethnic rights, environmental organizations, etc.
Incidence of the civil society in the public debate Numbers of referendums per legislative period
Empowerment IEM (as in UNDP methodology)
18
Basic functionings capabilities indicators
Dimension Indicator
Health   Access to the public sewage network. of individuals living in households with access to the public sewage network
Health   Proportion of children aged 0 to 3 with stunting
Health   Infant mortality rate. Total and dispersion by geographic areas
Health   Psychological distress
Dwelling condition Aggregate index of dwelling quality
Dwelling condition Over-crowding
Social integration () neither study nor work/Unemployed without social security coverage/Elder adult without social security coverage/ residential segregation (Duncan index)
Work/income Under-employment/lack of social security coverage/ poverty/non transfer income/income inequality
Education Average years of completed schooling in population elder than 23/ Attendance rates by educational level/ of students reaching the minimum requirements in PISA assessments and its dispersion
Participation of individuals participating in civil society activities (total and by educational attainment and sex)
Participation of individuals aged 18 or more that voted in the last national elections
19
Dimensions and indicators- agency and autonomy
Dimension variable Indicators (and basic questions) Domain of reference
a. Practical reason Can people like you change things in your community? Life plan and conception of the good
a. Practical reason Self-perception of empowerment by domain (9 steps) Dimension are to be defined
a. Practical reason Can people choose their own destiny? Perception of self-determination
a. Practical reason Can you imagine changes at the personal level? Perception of self-determination
b. Affiliation Are you confortable living with the persons that compose your household? Capability of living with others/social basis of self-respect
b. Affiliation Do you feel that your opinions are considered by your family and friends/work? Capability of living with others/social basis of self-respect
b. Affiliation Do you feel you play a key role with respect to your family and friends?/Work? Capability of living with others/social basis of self-respect
b. Affiliation Do you feel you were not able to participate in certain social events because you did not have the appropriate clothing? Capability of living with others/social basis of self-respect
c. Control over the enviroment (political and material) To what extent do you feel you can make desitions in your household (RAI index). Near surroundings
c. Control over the enviroment (political and material) To what extent do you feel you can make desitions in regards to your household assets (RAI index). Material
c. Control over the enviroment (political and material) To what extent you decide where to participate? Political
c. Control over the enviroment (political and material) Reasons to participate Political
20
IV. An Empirical excercise
21
IV.1 A comment on international rankings
22
  • IV.2 The proposed dimensions and assessments of
    well-being over time some results for Uruguay
  • Covering 2001-2008
  • Data from our National Household Survey and from
    Latinobarometer
  • Information missing / incomplete / unavailable
    for some years and/or indicators our paper makes
    a proposal regarding this missing data
  • As expected, the different informational basis
    and indicators lead to different stories
    regarding what happened in the period
  • In some cases, even within an approach,
    different indicators evolve in the opposite
    direction

23
Dimension Variable Indicator 2001 2003 2005 2007 2008 Trend
Utilitarianism              
Subjective well-being Life satisfaction of individuals satisfied or very satisfied with their lives 76,3 71,7 73,8 s/d s/d ?
Objective well-being   Wealth Average value of a composite index on access to durable goods   1,56 1,60 1,64 1,79
Objective well-being   Income Average per capita household income (2001100) 100,0 74,7 77,9 93,9 104,6
Welfarism                
Subjective well-being Life satisfaction SD on life-satisfaction 0,73 0,78 0,73 s/d s/d ?
Objective well-being   Wealth SD on composite index on access to durable goods 0,47 0,50 0,49 0,49 0,48 steady
Objective well-being   Income Gini index 0,45 0,44 0,44 0,46 0,44
24
Dimension Variable Indicator 2001 2003 2005 2007 2008 Trend
Libertarianism                
Limits to economic freedom Economic freedom index Heritage foundation index 70.7 69.8 66.9 68.4 67.9
Limits to expression freedom Press freedom index value International Press freedom index s/d 4.0 9.8 11.8 8.3
Interference of the governmentin the economy Tax burden Tax revenue/GDP 27.8 27.9 29.5 29.0 26.2
Interference of the governmentin the economy Public expenditure composition Public expenditure in defense as of public expenditure   1.6 1.2    
Interference of the governmentin the economy Public expenditure composition Social expenditure as a of public expenditure 22.4 20.8 19.7 22.0 21.7 ?
Limitations to property rights Robbery rate Robbery rates over 1000 inhabitants 20.8 27.2 31.4 30.0 32.7
Limits to rights to life Homicide rate  Homicide rates over 100.000 inhabitants 6.6 6.0 5.7 5.8 8.9
25
Dimension Variable Indicator 2001 2003 2005 2007 2008 Trend
Egallitarian libertarianism (Rawls). Second principle Egallitarian libertarianism (Rawls). Second principle Egallitarian libertarianism (Rawls). Second principle            
Income gap by gender and education Labor earnings Average hourly labor earnings by gender 0.91 0.89 0.91 0.90 0.88
Income gap by gender and education Labor earnings 6 years or less/12 years 0.68 0.69 0.68 0.68 0.71 Steady
Income gap by gender and education Labor earnings 6 years or less/16 years or more 0.31 0.32 0.31 0.33 0.35
Income gap by gender and education Labor earnings 12 years/16 years or more 0.46 0.46 0.46 0.49 0.49
Household income Income of the most deprived strata 1st decile average income 100.0 101.9 113.6 140.2 167.8
Household income Income of the most deprived strata Average income ratio 1st decile/median 0.35 0.36 0.34 0.35 0.34
Household income Income of the most deprived strata Average income ratio 1st decile/10th decile 0.07 0.07 0.07 0.07 0.07 steady
Household income Poverty FGT indexes (0 ,1 and 2) 18.8 30.9 29.4 25.5 20.6
Household income Poverty FGT indexes (0 ,1 and 2) 6.0 10.4 10.6 9.2 6.6
Household income Poverty FGT indexes (0 ,1 and 2) 2.7 4.8 5.3 4.3 3.0
Education School attendance rates by age 4-5 82.7 83.9 88.0 88.1 90.1
Education School attendance rates by age 13-15 93.5 94.5 93.9 92.9 93.2 steady
Education School attendance rates by age 18-22 43.9 49.3 49.8 43.4 44.6 steady
Education Schooling Average years of schooling (25 and more) 8.4 8.6 8.7 9.0 9.1
Education Expenditure Public expenditure in education/GDP   3.1 2.9 3.3 3.7
Health Expenditure Public expenditure in health/GDP   3.6 3.4 4.0 4.5
26
Dimension Variable Indicator 2001 2003 2005 2007 2008 Trend
Capabilities Capabilities Capabilities Capabilities Capabilities Capabilities Capabilities Capabilities Capabilities
Health and nutrition Sewage hh. Having access to the sewage public network 60.1 61.4 63.9 59.1 60.6 steady
Health and nutrition Child mortality Child mortality rate (0 to 1) 13.9 15.0 12.7 12.0 10.0
Health and nutrition Child mortality SD by geographical areas 2.2 3.8 2.3    
Health and nutrition Psychological distress   of ppl declaring distress 3.1 3.4 3.0    
Health and nutrition Psychological distress SD 1.1 1.0 1.1     steady
Housing Dwellling condition Composite index on quality of housing         11.9  ?
Housing Crowding Over 2 persons per room 8.6 7.8 7.9 7.9 6.8
Social integration Desaffiliation Not study or work/uninsured unemployed/elder adult with no access to pension system 17.4 18.4 16.0 15.1 13.8
Employment Income Under employed   16.5 20.4 18.6 14.5 12.8
Employment Income informality with no access to social security 18.8 30.9 29.4 25.8 21.6
Employment Income Poverty FGT0 18.8 30.9 29.4 25.5 20.6
Employment Income   FGT1 6.0 10.4 10.6 9.2 6.6
Employment Income   FGT2 2.7 4.8 5.3 4.3 3.0
27
Dimension Variable Indicator 2001 2003 2005 2007 2008 Trend
Capabilities (education already considered)  (education already considered)  (education already considered)  (education already considered)  (education already considered)  (education already considered)  (education already considered)  (education already considered) 
Education   Average years of schooling (gt23)   8.4 8.5 8.7 8.9 9.1
Education   Attendance rates (13 to 17)   77.2 80.0 78.5 75.0 76.7 -
Participation Voice actions persons that signed a public letter or petitioon 0.6   0.5     -
Participation Voice actions persons that contacted a public leader 0.2   0.2     steady
Participation Voice actions persons that contacted a public employee to complain 0.2   0.1     -
Participation Voice actions persons that contacted a parliament member 0.2   0.1     -
Participation Voice actions persons that contacted a political party 0.2   0.1     -
Participation Voice actions of persons that contacted an NGO 0.2   0.2     steady
Participation Voice actions persons that contacted the mass media 0.1   0.1     steady
28
  • V. Final Comments
  • Based on previous research, we propose dimensions
    to carry out comparisons consistent with the
    main contemporary approaches to distributive
    justice
  • Broadening the informational basis entails
    significant increases in the number of relevant
    indicators as well as on data sources, and
    advances in the two fields are required
  • Results are sensitive to the choice of dimensions
    and indicators
  • When operationalizating different conceptions
  • In some cases philosophical differences tend to
    fade
  • In others, approaches empirically overlap

29
  • V. Final Comments
  • A large effort in data collection needs to be
    done in the fields of agency and freedoms
  • As long as household surveys are built on the
    basis of traditional approaches to well-being,
    they need to broaden the dimensions in which they
    broaden their informational basis. Particularly
    relevant for developing countries
  • Aggregate indicators or separate indicators?
    Since evolution may be different and even in
    opposite direction, among other reasons, we make
    our case for a disaggregate view
  • Approaches to justice are embedded in indexes
    inequality and agency should not be left behind.

30
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