What is welfare – and different
understandings of welfare –
including central aspects of the
concept
Lecture 1
At what level to analyse welfare?
• Macro or micro
• Subjective or objective
• Use of subjective as well as objective indicators as
an indication of that the utility of goods is not the
same for all
• Furthermore, that we compare our own situation
with others
• Can be difficult analytically to move between
levels – however important as differences in the
level can help in explaining different viewpoints
and understanding of welfare
A few quotes to illustrate what welfare
is
• “well in its still familiar sense and fare,
primarily a journey or arrival but later also a
supply of food” (Williams, 1976)
• “Welfare 1 well-being, happiness, health and
prosperity (of person, community etc.) 2
(welfare) financial support from state” (Oxford
Dictionary, 2001)
Aspects of welfare
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Happiness
Security
Preferences
Need
Rewards
Again important to look at the relative
comparison of individual’s or group of
individuals
Example of indicators of welfare
Monetary
Objective
Non-monetary
Income
pr. Average
inhabitant
Subjective
Feeling
there
expectancy
that Level
is
life
not happiness
enough money
of
What constitutes happy countries
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Happier countries tend to be richer countries. But more important for happiness than income are social factors like
the strength of social support, the absence of corruption and the degree of personal freedom.
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Over time as living standards have risen, happiness has increased in some countries, but not in others (like for
example, the United States). On average, the world has become a little happier in the last 30 years (by 0.14 times the
standard deviation of happiness around the world).
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Unemployment causes as much unhappiness as bereavement or separation. At work, job security and good
relationships do more for job satisfaction than high pay and convenient hours.
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Behaving well makes people happier.
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Mental health is the biggest single factor affecting happiness in any country. Yet only a quarter of mentally ill people
get treatment for their condition in advanced countries and fewer in poorer countries.
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A stable family life and enduring marriages are important for the happiness of parents and children.
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In advanced countries, women are happier than men, while the position in poorer countries is mixed.
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Happiness is lowest in middle age.
Economic understanding of welfare
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Welfare as fulfilling the needs of the consumers (citizens?)
welfare is another word for utility– when measured it is often
related to income and wealth (gini, poverty)
welfare can in this understanding not be added across
individuals – and this makes the estimation of a societal
welfare-function difficult if not impossible
Well-being and distribution of consumption possibilities
therefore in focus
Sen’s capabilities – a set of functioning's including a positive
concept of freedom
GDP pr. inhabitant is therefore often seen as a good indicator
of the level of welfare in a country
Welfare in a social policy
understanding
• “all public provided and subsidized service,
statutory, occupational and fiscal” (Titmuss, 1968)
Social indicator research point at a broader perspective:
Satisfaction, quality of work, health, belongingness etc
– the ability to fulfil needs, but also social trust,
literacy, life-expectancy
Absolute poverty defines goods necessary to live,
including shelter and a basket of goods with
sufficient nutrition, however the level will change
over time. Therefore often a relative approach. This
has, for example, influenced EU’s definition and
understanding of relative poverty and in risk of living
in poverty.
Welfare at micro and macro -level
• Macro : GDP pr. inhabitants and spending on
welfare policies (an indicator of available
resource for the public sector)
• Micro: Subjective feeling and level of
happiness and number of people living in
poverty
UNICEF’s 6 Dimensions of child wellbeing
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Material well-being
Health and safety
Educational well-being
Family and peer relationships
Behaviours and risks
Subjective well-being
OECD’s Social Indicators
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Median equalized household income in USD PPPs
Employment to population ratio for population aged 15-64
Unemployment rate for the population aged 15-64
PISA mean scores on the reading literacy scales
Gini coefficient of income inequality
Poverty rate
Percentage finding it difficult or very difficult to manage on current income
Percentage of average gross wage to reach a poverty threshold of 60% of median income for lone
parents with two children
Life expectancy at birth Infant mortality rat
Rate of positive experience
Percentage of persons satisfied with water quality
Percentage of people expressing high level of trust in others
Corruption index
Pro-social behavior
Voting rates
Tolerance of diversity
Change in perception of what welfare
is – and its influence on social policy
• When historical understanding of what welfare is – and
what goods and services are necessary for a decent life
– then this has implications for welfare policies,
including what is public and private responsibility.
• New options and roles can also change perception of
what social policy shall do
• Altruism might change – deserving/not-deserving
perceptions can still, as historical, have an impact on
social policy
• Church, market and family still have, in many countries,
a central role as provider and in financing of welfare
A Definition of welfare
• the highest possible access to economic
resources, a high level of well-being, including
the happiness of the citizens, a guaranteed
minimum income to avoid living in poverty,
and, finally, having the capabilities to ensure
the individual a good life
Types of benefits and their relation to
principles of justice
Principles of justice Benefit types – Policy Orientation
Need
Means-tested income maintenance and services
(health, education, and housing); special needs
provision; and universal human needs.
Merit
Social insurance schemes; conditionality of welfare
receipt;
equal
opportunity
(meritocracy);
and
counseling and training
Equality
Guaranteed unconditional basic income; universal
public services; equalization of income; fair equal
opportunity; and affirmative action
Loss of income
• The degree of loss depends on time on
welfare benefit – and the level of public
benefits. Often lowest at short run, but larger
in the longer time perspective
• Their might be differences in relation to, for
example, people with disabilities.
Universal or selective benefits
• Universal benefits connected to citizenship
• Selective implies membership of typical a
social insurance fund
• Universal benefits can be given based upon
age, need or a specific social contingency
Fixed or flexible benefits
• Flexible benefits makes it possible to look into
the whole-life situation of a person/family
• Fixed benefits implies that the citizen know
the seize of the benefit
• Legal fixed benefits might risk to imply lower
benefits – flexible level of benefits risk that
those best able to communicate with the
street- level bureaucrat gets the highest
benefit
Types of benefits
• In-cash
• Services – free and/or with user charges
• Vouchers
Organisation and steering in country xx
• Here space for information on and
presentation of the specific approach to
welfare in a given country
Effectiveness vs. Justice
• A simple system with few rules easiest to
administer
• However, could imply benefits (child allowances
often an example) also to those with high income
• Delimitation, calculation and number of rules
need to be balanced against the ambition of a
high level of justice
• ”the feeling of justice” – might influence the
willingness to pay
Summing- up
• Welfare has many dimensions of economic
and non-monetary elements
• Analytically often most simple by using
objective indicators
• There is different principles for benefits and
services and also the management and
steering hereof