New Directions in Welfare
OECD
6-8 July 2011, Paris
Theories of justice
and the measurement of well-being
Guillermo Alves – Matías Brum – Andrea Vigorito
Instituto de Economía
Universidad de la República - Uruguay
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
aggregation procedures, leading to different country rankings
•
Main indexes (GDP, BLI, HDI) and measures exclude important items in
their calculation:
different
• 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
Correlations btw diff rankings of OECD countries
Correlations between HDI, GNI & BLI rankings
HDI
GNI
HDI
1
GNI
0.735
1
BLI
0.809
0.826
BLI
1
Outline of the presentation
I. Main purposes
II. Principles underlying social indicators
III.Theories of justice and the dimensions of well-being:
a proposal
IV.An empirical exercise
- International rankings: a comment
- Trends: an application to Uruguay
V. Final comments
I. Main purposes
•
Drawing from the main contemporary approaches to justice and justice
theories, discuss which dimensions should be taken into account for wellbeing 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
II. Principles underlying social indicators
•
Principles guiding the system (Atkinson et al, 2002)
•
Principles guiding individual indicators (Atkinson et al, 2002)
•
Databases to be considered
• Household , individual surveys microdata
•
•
•
•
•
•
•
•
•
•
•
•
•
Balance among the different dimensions
Consistency among components
Transparent and accessible for all systems
Levels of importance must be determined
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
Firms and organizations microdata
National accounts system data
Administrative records, laws, decrees, norms
III.Theories of justice and the dimensions of
well-being: a proposal
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.
III.1 Utilitarianism and Welfarism
Dimension
Subjective
Well-being
Objective wellbeing
•
•
Indicator
Happiness / Life satisfaction: % of individuals that declare being very
satisfied or satisfied with their lives
Adjustment among desires and their satisfaction: Life satisfaction by
domain and ranking carried out by interviewee
Perception of economic situation: % of individuals that perceive it as
good or very good
Wealth: Average and SD of a durable goods index.
Income: Per capita average household income. Gini index. Generalized
Lorenz curves.
Consumption: Per capita average expenditure and Gini index of per capita
expenditure.
Utilitarianism as sum of individual utility
Welfarism as inequality in utility
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
III.2 Libertarianism (Nozick)
Dimension
Indicator
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
Tax burden
Interference of the government
Public expenditure in defense as % of public expenditure
in the economy
Social expenditure as a % of public expenditure
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
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)
Lexicografic priority to basic freedoms
Dimension
Vigency of a judicial system
Indicator
Existence of an independent judicial power
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
Limits to right to life
Limits to the freedom of
association
Existence of laws that
regulate competition
Validity of a constitution that
Warranties equality of
opportunity
Validity of property rights
Existence of discriminatory laws against population groups:
existence of norms that allow slavery.
Homicide rates for 100.000 inhabitants
Laws and regulations that restrict the freedom of association
Existence of institutions and laws that regulate competition
Indicators based on rights warranted in the constitution
Indicators based on the norms on property rights and their
limitations
Equal access to positions and
the difference principle
Dimension
Equal access to
positions
Income gap by gender
and education
Indicator
Proportion of public and private work positions subject to open
competition (total and by educational attainment required)
Average hourly labor earnings by gender and schooling
Average GDP and per capita household income
Income distribution by quantiles
Income
Average household income before public transfers compared to the
poverty line
FGT indexes (0, 1, 2)
Type I and II errors in public transfers targeting
Average wealth index
Wealth
Wealth distribution by quantiles
Evolution of the average wealth of the first quantile
Taxation
Public transfers
Average tax burden and progressivity of the tax system
% of public transfers relative to GDP
III.4. Roemer’s 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 expost 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
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
Freedom indicators: additions to
egalitarian liberalism
Dimension
Indicator
Associativeness index
Conflict index
Civil society organization
Existence of trade unions and entrepreneur
associations, and affiliation rate
Existence and evolution of the number of NGOs
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)
Basic functionings & capabilities
indicators
Dimension
Indicator
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
Infant mortality rate. Total and dispersion by geographic areas
Psychological distress
Dwelling
condition
Social
integration
Work/income
Aggregate index of dwelling quality
Over-crowding
(%) neither study nor work/Unemployed without social security
coverage/Elder adult without social security coverage/ residential
segregation (Duncan index)
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)
% of individuals aged 18 or more that voted in the last national
elections
Dimensions and indicatorsagency and autonomy
Dimension
variable
a. Practical
reason
Indicators (and basic questions)
Domain of reference
Can people like you change things in your
community?
Self-perception of empowerment by domain
(9 steps)
Life plan and
conception of the good
Dimension are to be
defined
Can people choose their own destiny?
Can you imagine changes at the personal
level?
Perception of selfdetermination
Are you confortable living with the persons
that compose your household?
b. Affiliation
Do you feel that your opinions are
considered by your family and friends/work?
Do you feel you play a key role with respect
to your family and friends?/Work?
Do you feel you were not able to participate
in certain social events because you did not
have the appropriate clothing?
To what extent do you feel you can make
desitions in your household (RAI index).
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).
To what extent you decide where to
participate?
Reasons to participate
Capability of living
with others/social
basis of self-respect
Near surroundings
Material
Political
IV. An Empirical excercise
IV.1 A comment on international rankings
Inequality
Traditional View
GDP
HDI
GDP
Health
Education
Better Life Index
Housing
Income
Jobs
Community
Education
Environment
Governance
Health
Life Satisfaction
Safety
Work-life balance
Missing dimensions
Agency
Freedoms
Justice Theories
Utilitarianism Libertarism Rawls Capabilities Eq. Op
X
p
X
p
p
p
X
X
X
p
X
X
X
X
X
p
X
X
p
p
p
p
p
p
X
X
X
X
X
X
X
X
X
X
X
X
p
X
X
X
X
X
X
p
X
X
X
X
X
X
X
X
p
X
X
p
X
X
p
X
X
X
X
p
X
X
p
X
p
p
p
p
p
p
p
p
X
p
p
p
p
p
p
p
X
X
p
X
p
X
X
X
X
X
X
p
X
p
p
p
X
p
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
Dimension
Variable
Indicator
2001
2003
2005
2007
2008
Trend
Life
satisfaction
% of individuals
satisfied or very
satisfied with
their lives
76,3
71,7 73,8
s/d
s/d
?
Wealth
Average value of
a composite
index on access
to durable goods
1,56 1,60 1,64
1,79
+
Income
Average per
capita household
income
(2001=100)
100,0 74,7 77,9 93,9 104,6
+
Life
satisfaction
SD on lifesatisfaction
0,73
0,78 0,73
s/d
?
Wealth
SD on composite
index on access
to durable goods
0,47
0,50 0,49 0,49
0,48
steady
Income
Gini index
0,45
0,44 0,44 0,46
0,44
+
Utilitarianism
Subjective well-being
Objective well-being
Welfarism
Subjective well-being
Objective well-being
s/d
Dimension
Variable
Indicator
Economic
freedom
index
Heritage
foundation index
Press
freedom
index value
International Press
freedom index
Tax burden
Tax revenue/GDP
2001
2003
2005
2007
2008
Trend
Libertarianism
Limits to
economic
freedom
Limits to
expression
freedom
Public
expenditure
composition
Social expenditure
as a % of public
expenditure
Limitations to
property rights
Robbery rate
Robbery rates
over 1000
inhabitants
Limits to rights to
life
Homicide
rate
Homicide rates
over 100.000
inhabitants
–
8.3
–
27.8 27.9 29.5 29.0 26.2
–
s/d
Public expenditure
in defense as % of
public expenditure
Interference of the
government
in the economy
70.7 69.8 66.9 68.4 67.9
4.0
9.8
11.8
1.2
–
22.4 20.8 19.7 22.0 21.7
?
20.8 27.2 31.4 30.0 32.7
–
6.6
–
1.6
6.0
5.7
5.8
8.9
Dimension
Variable
Indicator
2001
2003
2005
2007
2008
Trend
Average hourly labor earnings by
gender
0.91
0.89
0.91
0.90
0.88
+
6 years or less/12 years
0.68
0.69
0.68
0.68
0.71
Steady
6 years or less/16 years or more
0.31
0.32
0.31
0.33
0.35
–
12 years/16 years or more
0.46
0.46
0.46
0.49
0.49
–
1st decile average income
100.0
101.9
113.6
140.2
167.8
+
Average income ratio 1st
decile/median
0.35
0.36
0.34
0.35
0.34
+
Average income ratio 1st decile/10th
decile
0.07
0.07
0.07
0.07
0.07
steady
18.8
30.9
29.4
25.5
20.6
+
6.0
10.4
10.6
9.2
6.6
+
2.7
4.8
5.3
4.3
3.0
+
4-5
82.7
83.9
88.0
88.1
90.1
+
13-15
93.5
94.5
93.9
92.9
93.2
steady
18-22
43.9
49.3
49.8
43.4
44.6
steady
Schooling
Average years of schooling (25 and
more)
8.4
8.6
8.7
9.0
9.1
+
Expenditure
Public expenditure in education/GDP
3.1
2.9
3.3
3.7
+
Expenditure
Public expenditure in health/GDP
3.6
3.4
4.0
4.5
+
Egallitarian libertarianism (Rawls). Second principle
Income gap
by gender
and
education
Labor
earnings
Income of
the most
deprived
strata
Household
income
Poverty
School
attendance
rates by age
Education
Health
FGT indexes (0 ,1 and 2)
Dimension
Variable
Indicator
2001
2003
2005
2007
2008
Trend
% hh. Having access to the
sewage public network
60.1
61.4
63.9
59.1
60.6
steady
Child mortality rate (0 to 1)
13.9
15.0
12.7
12.0
10.0
+
SD by geographical areas
2.2
3.8
2.3
+
% of ppl declaring distress
3.1
3.4
3.0
+
SD
1.1
1.0
1.1
steady
Capabilities
Sewage
Health and nutrition
Child mortality
Psychological
distress
Housing
Social integration
Dwellling
condition
Composite index on quality
of housing
Crowding
Over 2 persons per room
8.6
7.8
7.9
Desaffiliation
Not study or
work/uninsured
unemployed/elder adult
with no access to pension
system
17.4
18.4
16.5
Under
employed
Employment & Income
11.9
?
7.9
6.8
+
16.0
15.1
13.8
+
20.4
18.6
14.5
12.8
+
% informality
% with no access to social
security
18.8
30.9
29.4
25.8
21.6
+
Poverty
FGT0
18.8
30.9
29.4
25.5
20.6
+
FGT1
6.0
10.4
10.6
9.2
6.6
+
FGT2
2.7
4.8
5.3
4.3
3.0
+
Dimension
Variable
Capabilities
(education already considered)
Education
Participation
2001
2003
2005
2007
2008
Average years
of schooling
(>23)
8.4
8.5
8.7
8.9
9.1
Attendance
rates (13 to 17)
77.2
Voice actions
Indicator
Trend
+
80.0
78.5
75.0
76.7
% persons that signed a
public letter or petitioon
0.6
0.5
-
% persons that contacted a
public leader
0.2
0.2
steady
% persons that contacted a
public employee to complain
0.2
0.1
% persons that contacted a
parliament member
0.2
% persons that contacted a
political party
0.2
% of persons that contacted
an NGO
0.2
0.2
% persons that contacted the
mass media
0.1
0.1
0.1
0.1
steady
steady
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
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.
Thanks for your attention