Change in the Gini Index (1990’s – 2000’s) …and inequality?
What inequality? Income, consumption? Opportunities, assets?
1 = “Incomes should be made more equal" 10 = “We need more income differences as incentive to individual effort" Source: World Values Survey; conducted by Inter-univerisity Consortium of Political and Social Research, University of Michigan, 1999-2000; cited in Inglehart et al, 2004. Inequality of what? Incomes? Outcomes? This polarizes the policy debate Inequality of opportunities….. facilitates consensus?
Improvement in poverty indicators India, Indonesia and Peru reduced child mortality ……… Source: DHS,
But inequalities within countries are large …and not always falling Large differences across quintiles (convergence in India, Indonesia, Peru) Source: DHS
… inequities also across areas … inequities also across areas Source: DHS, STATcompiler
Another poverty indicator: malnutrition Reduction in % of children underweight in India, Nigeria and Peru Source: DHS
But little or no convergence between the richest and poorest – in fact widening of rich-poor gap for India and Nigeria And again large, persistent and in some cases increasing gaps Source: DHS, STATcompiler
Two Latin American children: Probability of completing 6th grade on time Child with 4 siblings in single- parent rural household, household head without formal education and per capita income of 1 US$ (PPP) Child with 1 sibling, in urban two- parent household, household head with secondary education and per capita income of 25 US$ (PPP)
Two African children: Probability of completing 6th grade on time
“ 4 out of 10 children less than 5 years do not have access to clean water” Problem 1: access/coverage Problem 1: access/coverage But there there is a second problem here “Those 4 children are indigenous Problem 2 : circumstances affect children's chances. distribution
The equality of opportunity principle Circumstances exogenous to the individual, like birth place, gender, ethnicity, income and education of parents should not determine the persons wellbeing
Human Opportunity Index Inequality -sensitive coverage rate that incorporates: a) The average coverage of a good or service, which society accepts should be universal b) If it is allocated according to an equality of opportunity principle Coverage/access rate of a discounted by a penalty for inequality of opportunities Where, Average access (C) Inequality of Opportunity Index (D)
Defining the Inequality of Opportunity Index (D) Mean coverage rate for population Predicted coverage rate of individual i. Obtained from a logit model using as independent variables the circumstances and dependent variable the access to the opportunity An intuitive interpretation of D: Share of the total number of opportunities that needs to be reallocated to ensure equality of opportunity. Or the degree of dispersion of group specific coverage rates
Circumstances Characteristics outside the controls of individuals Society wants these to not influence a child’s access to basic opportunities. Gender Parents’ education Household’s location Number of Siblings Ethnicity Altitude in Andean Region in LAC. Child’s orphan status in many conflict- affected countries.
Indicators Good or service that society agrees is critical for individual development Essential for poverty eradication Universality is a valid social objective. Examples School attendance Completing primary on time Access to water Access to sanitation Access to electricity
In terms of school attendance, African countries are comparable with many countries in LAC region – in coverage and HOI Africa and Latin America (late 2000s) Note: HOIs use the same definition of opportunities and comparable list of circumstances
Africa and Latin America (late 2000s) African countries compare poorly with most LAC countries on completion of primary on time - Late entry is a major problem in Africa Finished Primary education on Time
Encouraging trends for Africa on school attendance (late 1990s – late 2000s) Large improvements in school attendance for most African countries In almost all African countries change in HOI > change in coverage reduction in inequality in attendance
But mixed picture on trends for primary school completion in Africa Little or no improvement in HOI for 7 out of 16 African countries Increase in HOI much smaller than increase in coverage for the 9 African countries showing an improvement rise in inequality in primary school completion Finished Primary education on Time Annual Change
Source: World Bank Africa and Latin America – Electricity
Source: World Bank using DHS data; work under progress (do not cite) Changes in the HOI - Electricity (late 1990’s vs. late 2000’s)
Source: World Bank. Sanitation – Flush toilet Africa and Latin America – Sanitation
Source: World Bank. Access to water – piped water in the dwelling or property Africa and Latin America – Access to clean water
Source: World Bank using DHS data; work under progress (do not cite) Changes in the HOI - Sanitation (late 1990’s vs. late 2000’s)
Source: World Bank using DHS data; work under progress (do not cite) Changes in the HOI - Water (late 1990’s vs. late 2000’s)
Source: World Bank HOI related to Access to key Household Services Indonesia (2009) Coverage rate (%) Dissimilarity Index (%) HOI (%) Access to improved water 66.73.064.6 Access to improved sanitation 96.61.495.3
Source: World Bank HOI related to Access to key Household Services Indonesia (2009) Coverage rate (%) Dissimilarity Index (%) HOI (%) Access to piped water 20.022.315.6 Access to improved water 66.73.064.6 Access to sanitation (Flush toilet) 75.99.468.8 Access to improved sanitation 96.61.495.3
HOI – Completing primary education on time Brazilian states Uruguay No state in Brazil has an Opportunity Index similar to Chile. Several states have an index inferior to Guatemala
Moving the goalposts Relevant basic opportunities change with economic development Moving the goalposts Relevant basic opportunities change with economic development Basic Opportunities in Chile
Questions that arise in applying HOI Some examples Opportunities may need to be defined differently; but that may affect comparability across regions Social objectives of universality need not necessarily be the same across regions. Even the same “basic” key goods and service may have to be defined differently for some countries, for HOI to be useful, (Example: basic access to water in LAC, Africa and East Asia Circumstances are exogenous to the child today, even if they can be influenced by policy (e.g. Child’s orphan status, parents’ education)
Human Opportunity Index Is a Inequality -sensitive coverage rate that incorporates: a) The average coverage of a good or service, which society accepts should be universal b) If it is allocated according to an equality of opportunity principle It is a coverage/access rate of a discounted by a penalty for inequality of opportunities It is an inequality adjusted standard. With a standard established by society, with circumstances that define the dimensions of inequality of opportunity established by society.
Political imperative of social inclusion leads to the need of measuring progress towards less inequality and poverty These indicators allow to assess the current performance of the country in the objective of giving every children a chance.