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Motivation

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.

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Motivation

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  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

  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. Theories of justice and thedimensions 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 • 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)

  12. III.3 Egalitarian Liberalism (Rawls) • Rawls’ twojusticeprinciplesestablishthegroundforcomparisons • Thefirstprincipleimpliesthatbasicfreedoms are abovetherest of thedimensions (lexicographicpriority) • Thesecondprincipleistwofold: establishestwoconditionsthat are necessaryfortolerance, and topreventsituationsof social inequality: • - Equality of possibilitiestoaccessjobs and positions • - Differenceprinciple: inequalitiesneedtoturninto a majorbenefittothelessadvantagedmembers of society. • Dimensions: accesstoprimarygoods • - Social basis of self-respect • - Wealth • - Income • Operationalization has manycaveats: • - Identification of lessadvantagedgroups • - Unidimensionality of disadvantage (basedonincomeonly) • - Tolerancetohighinequalitylevels (withoutcontradictingtheDifferencePrinciple)

  13. Lexicografic priority to basic freedoms

  14. Equal access to positions and the difference principle

  15. 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 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

  18. Basic functionings & capabilities indicators

  19. Dimensions and indicators- agency and autonomy

  20. IV. AnEmpiricalexcercise

  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. 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 sensitivetothechoice of dimensions and indicators • Whenoperationalizatingdifferentconceptions • In some cases philosophicaldifferencestendtofade • In others, approachesempiricallyoverlap

  24. 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.

  25. Thanks for your attention

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