Project ORDINEQ (The Measurement of Ordinal and Multidimensional Inequalities) | ANR - Agence Nationale de la Recherche ANR funded project | ANR - Agence Nationale de la Recherche

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ANR funded project

(DS0802) 2016
Projet ORDINEQ

The Measurement of Ordinal and Multidimensional Inequalities

While greater GDP per capita has often been assimilated with higher society welfare in the past, following the persuasive arguments of A.K. Sen (Commodities and Capabilities, North-Holland, Amsterdam, 1985), it is now widely accepted among the economic profession that a person's well-being comprises many other dimensions than income. The need for a more comprehensive approach to well-being has been reiterated by the Stiglitz-Sen-Fitoussi Commission that further recommended that the distribution among the citizens of well-being and of its different components is taken into account in the computation of social welfare. The recognition of the multidimensional nature of well-being has given rise to distinct approaches among which the construction of dashboard indices and composite measures has played a prominent role. Focusing on each dimension of well-being in isolation, the dashboard approach fails to provide an overall view of the society's performance. The Human Development Index (HDI) of the United Nations, that incorporates the three essential dimensions of a person's well-being (namely, income, health and education), is a follow-up of Sen's ideas. More recently, the Better Life Index (BLI) of the OECD has extended the scope of the HDI by introducing eight dimensions in addition to those used in the computation of the HDI.

While they represent notable advances in the measurement of the overall performance of the society and, beyond that, of the well-being of its members, both the HDI and the BLI are not exempt of deficiencies. The HDI and the BLI are aggregate indices and, as such, they do not care much of the distribution among the population of the different attributes that contribute to a person's well-being, not to speak of the distribution of well-being in the society. By combining aggregates - one for each attribute - without paying attention to the possible associations between the different dimensions of well-being, the HDI and the BLI leave aside important determinants of a society's welfare like the exposure and vulnerability of the individuals to various sorts of risks. Finally, by transforming heterogenous data into distributions of scores for each attribute and applying to them standard measures, the HDI and the BLI neglect the fact that the prime data are of different nature, ranging from cardinally-measurable attributes (like income) to variables involving ordered categories (like health status).

Building on the fiction of the paternalistic ethical observer, we propose to construct measures of socio-economic performance and well-being that (i) acknowledge the multidimensional nature of well-being, (ii) pay due attention to the distribution and interaction between the attributes, and (iii) take full account of the measurability nature of the attributes. These measures will make one able to provide answers to questions of interest for the policy-maker and the general public like the following:

Q1. Can we correctly claim that our health system guarantees equal access to medical care whatever the circumstances of the individuals? Is a move in direction to the British health care system likely to reduce the inequalities of health statuses among the population?

Q2. Does the poor performance on average of French students at the PISA tests go along with high inequalities in the distributions of the scores suggesting that the French educational system might be doubly inefficient? To which extent inequalities - provided that there is evidence of such inequalities - in reading, mathematics and problem solving are related to the socio-economic characteristics of the parents and more generally to their origins?

Q3. Is ex-post redistribution by means of progressive tax-benefit systems more effective in reducing the long run income inequalities than an ex-ante redistributive policy that would tax more heavily the intergenerational transmission of wealth?

Partners

CREM Centre de Recherche en Economie et Management

GREQAM GROUPEMENT DE RECHERCHE EN ECONOMIE QUANTITATIVE D'AIX-MARSEILLE

GREThA Groupe de Recherche en Economie Théorique et Appliquée

LAMETA-CNRS Laboratoire Montpelliérain d'Economie THéorique et Appliquée

ANR grant: 299 786 euros
Beginning and duration: octobre 2016 - 48 mois

 

ANR Programme: (DS0802) 2016

Project ID: ANR-16-CE41-0005

Project coordinator:
Monsieur Patrick MOYES (Groupe de Recherche en Economie Théorique et Appliquée)

 

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The project coordinator is the author of this abstract and is therefore responsible for the content of the summary. The ANR disclaims all responsibility in connection with its content.